Construction Law Developments

How Will Obama's Proposed Agency Consolidations Affect Your Business?

2012-01-18T18:57:00.001-08:00

In the short run,these consolidations will mean significant staff cuts across all six agencies.These cuts, whether through attrition, early retirements, or reductions inforce, will disrupt relationships within government, and between government andthe businesses these agencies are supposed to assist. Agency action will takelonger and require more effort from constituent businesses. For many months,everything will seem to grind to a halt while newly reorganized departmentsdraft, publish and issue regulations implementing the proposed changes. Timedelays already built into the regulatory process will frustrate businessleaders and government bureaucrats alike.

However, if PresidentObama succeeds in putting together a “single point of contact” relationshipbetween business and the federal government, like the business services hotlineMayor Daley established in Chicago, the final outcome should significantlystreamline all interactions between the federal regulatory bureaucracy and thesmall businesses which drive the American economy forward. It remains to be seen whether the intentionalRepublican House blockade of everything President Obama puts in the hopper willkill this initiative aborning.

More Bad News for Construction Industry Employment

2012-01-10T14:47:00.001-08:00

Overall Americanemployment added 1.6 million jobs in 2011, compared with only 940,000 jobsadded to the economy in 2010. Unemployment has dropped from 9.6% last year toonly 8.9% now. Still, some 14 million Americans remain out of work.

In spite of theseencouraging overall gains, the employment situation in the construction industryremains bleak. Georgetown University’s Center on Education and the Workforcereleased a study last week analyzing 2009 and 2010 Census Bureau Community Surveydata, and concluding that among all recent college graduates, the highestunemployment of all, at 13.9%, is the group with degrees in architecture,comparing quite unfavorably with overall unemployment of only 8.9% for recentcollege grads as a whole population.

Bureau of Labor Statisticsdata for December 2011, showed 200,000 jobs created for the month, but only17,000 of those were in the construction sector of the economy. Across theUnited States December 2011, industrial construction starts totaled only $10billion, including $4.6 billion in power generation and distribution; $1.8billion in manufacturing; $1.2 billion in the pharmaceutical and biotechsectors; and $1.0 billion in the food and beverage sectors. Geographically, $2.8billion in industrial construction starts are on the west coast; $2.1 billionin the Great Lakes region; and $1.4 billion in the midwest.

American Jobs Act – What Is In It For Your Construction Business?

2011-09-18T11:56:00.000-07:00

Please, ladies andgentlemen, don’t shoot the messenger. I don’t write the legislation, I justreport what is in it so your business can take advantage of the appropriationsif you so choose. Having said that, here is a breakdown of what is in the 155page American Jobs Act of 2011, as introduced by the Obama administration,which affects the construction industry, segment by segment.

If your construction industry group orbusiness would like a more detailed presentation of the provisions of thisproposed federal law, I am available to speak to your organization about it.Just send me an e-mail at the address below proposing a time and location.

All Segments ofConstruction

· BuyAmerican iron, steel and manufactured goods

· Employeepayroll tax cut from 4.2% to 3.1%

· Employerpayroll tax cut from 6.2% to 3.1%

· Zeropayroll tax on pay increases up to $50 million in increased wages

· 100%first year write off for new equipment in 2011

· 50%first year write off for new equipment in 2012

· Taxcredit for hiring veterans unemployed 6 months or more increased from $4,800 to$9,600

· Taxcredit for new hiring of veterans unemployed 6 months or more of $5,600 and$2,400 for new hiring of veterans unemployed 4 weeks to 6 months

· Taxcredit of $4,000 for new hiring of any person unemployed for 6 months or more

· $1.5billion for job training, including registered apprenticeship programs

· Prohibitshiring discrimination against the unemployed

· Requirespayment of Davis Bacon prevailing wages on any project receiving funding

ResidentialConstruction

· ProjectRebuild appropriates $15 billion for rehabilitation of vacant and foreclosedhomes and neighborhood stabilization

· Includeshomeownership assistance and homebuyer rehabilitation funding

· Prohibitsuse of funds for demolition of existing public housing

· Prohibitsflipping of rehabilitated properties

· Includesrequirements to hire a certain portion of labor force from the project vicinity

CommercialConstruction

· SchoolBuilding Modernization: $25 billion for elementary and secondary schoolbuildings, plus another $5 billion for community colleges

· Upto 30% of $15 billion in Project Rebuild funds may be used for commercialbuilding rehabilitation that will help stabilize neighborhoods

IndustrialConstruction

· $6.5billion for construction of a new nationwide public safety broadband network

GovernmentConstruction

· IncreasesSBA surety bond guarantees from $2 million up to $5 million

· $27billion for highway and railway construction under current formulas

· $4billion for intercity and high speed passenger rail corridor construction with100% federal share

· $3billion for public transit construction with 100% federal share

· $2billion for Amtrak construction upgrades

· $6billion for fixed bus guideway construction

· $5billion for competitive surface transportation construction grants

· $10billion initial funding for American Infrastructure Financing Authority toprovide direct loans or loan guarantees financing infrastructure constructionprojects which can repay by means of tolls, user fees or other dedicatedrevenue sources in 35 years or less

Obama’s Jobs Speech

2011-09-05T21:28:00.000-07:00

Thursday eveningSeptember 8 at 7 p.m. Washington D. C. time President Obama will speak to ajoint session of Congress about initiatives he is proposing to put 25.4 millionunemployed and underemployed Americans back to work in a growing economy.Outside Obama’s senior staff no one is exactly certain what his proposals willinclude, but we expect to hear him talk about the following, not necessarily inthe order presented here:

ConstructionIndustry

About half of the ObamaAdministration proposals will be aimed directly at the ultra-high unemploymentamong skilled construction tradespeople:

FAA Reauthorization

The current temporaryreauthorization of funding for the FAA expires September 16. When CongressmanJohn Mica forced a shutdown of FAA runway and tower construction projects, thatCongressional action stopped work on $2.5 billion of infrastructureconstruction until Transportation Secretary LaHood pushed through emergencylegislation to put tradespeople back to work on these projects. The money topay these workers will stop flowing again on September 17 unless a clean FAAreauthorization bill is enacted and signed into law by then, or another temporaryextension is passed.

Surface TransportationReauthorization

There has not been thecustomary six year Highway Trust Fund reauthorization since Obama took office.Instead, highway, water and rail transportation infrastructure constructionacross the country has been financed by a series of three and six monthtemporary extensions. Some of the slack has been taken up by stimulusappropriations, but the stimulus was intended to add to, not substitute for, regularsurface transportation initiatives, and as a result, the economy has not beenstimulated.

House Republicans onthe Transportation and Infrastructure Committee are proposing to slash thelevel of appropriations from past legislation by more than half. Look for Obamato seek $550 billion in appropriations over the next six years, rather than the$230 billion Republican six year proposal.

Infrastructure Bank

The idea of a federalinfrastructure bank to draw private investment into toll highway, rail and portfacility construction – projects in which private investors could earn areasonable return on their investment – has succeeded in facilitatinginfrastructure construction in Europe and elsewhere. This is a pet project ofthe Obama administration, plus there are two versions of proposals already putforward by Senator John Kerry (D. Mass.) – who proposes a $10 billion federalstart up appropriation – and Representative Rosa DeLauro (D. Conn.) - whoproposes $25 billion in federal seed money. Both versions would includeinvestments in highway, rail, waterway, drinking water and sewage treatment,and energy projects. DeLauro’s version would also include broadbandcommunications construction.

Commercial BuildingRetrofits

Another proposal whichhas been the subject of Obama administration trial balloons lately is the ideaof a tax incentive to promote private investment in retrofitting existingcommercial buildings for greater energy efficiency. This would put thousands ofskilled tradespeople back to work without any direct federal expenditure, andwould bring millions of private dollars now on the sidelines back into oureconomy. Also, it has the additional factor of appealing to Republicans, whoare more likely to support an initiative that looks like a tax cut forbusiness. Apparently Obama’s Jobs and Competitiveness Council is behind thisproposal.

School BuildingRenovations

This proposal will beburied in the middle of the speech somewhere. Obama is always an advocate forimproving the education systems of America, but because this particularinitiative would involve new direct federal expenditures, it will likely drawstrong opposition from across the aisle.

Broadband TowerConstruction

While the stimulusearly in Obama’s term appropriated a great deal of cash for studying thebroadband needs of unserved and underserved areas of the nation, there has notbeen a lot of actual communication tower construction with those funds. Onlyabout 68% of U. S. land area is currently covered by broadband communicationnetworks – Obama will seek expansion of that coverage to 98%. This is anotherprogram which could bring private investment into play with minimal directfederal expenditures, as revenue from broadband users could ultimately repayinvestors for most of the cost of connecting outlying populations to cable TVand the internet.

Power GridModernization

This has been anotherfavorite of Obama’s, as part of his alternative energy initiatives and climatechange reduction legislation. Of course, power grid modernization should alsoattract considerable private investment from utility companies if the rightincentives are enacted. And, significant segments of the skilled constructiontrades would be put back to work should power grid construction expandsignificantly. The massive outages on the east coast from recent storm damagewill highlight the need for this sort of infrastructure investment.

Local Construction Initiatives

You may not hearanything about this one in Obama’s speech, but Representative Judy Biggert (R.Ill. 13^th District) announced a couple weeks ago that VeteransAdministration Secretary Eric Shinseki has approved construction to transformthe old Silver Cross Hospital building in Joliet, Illinois into a 60,000 s.f.VA outpatient clinic to serve the growing south suburban population ofreturning veterans. Silver Cross is moving into a new hospital facility in NewLenox.

OtherObama Proposals

Of course theconstruction industry won’t be the president’s only target for economicimprovement. His speech will likely also include initiatives like taxincentives, direct federal expenditures, and cutting red tape to improve theeconomic competitiveness of American private enterprise. In the tax incentivecategory, look for proposals to extend the temporary 2% reduction in payrolltax rates; a tax credit for putting new employees on company payrolls; and anadditional tax credit for hiring returning armed forces veterans. Proposeddirect federal expenditures could include further extension of unemployment benefitsfor out of work Americans; assistance to local school districts for hiring moreteachers; and specialized job training programs aimed at the long termunemployed. Finally, in the competitiveness category, we expect Obama to pushratification of three pending free trade treaties; and improvements in patentlaw to speed up commercialization of new American inventions.

Get Ready For The Construction Industry Unemployment Devastation Act

2011-07-07T07:22:00.000-07:00

House Transportation and Infrastructure Chairman John Mica will call it the six year highway trust fund reauthorization legislation, but that will be a completely inappropriate title for the bill. Today Mica is expected to introduce a six year reauthorization package that will slash funding for roads, bridges and other infrastructure from past levels down to $230 billion over six years. If Mica’s version of the bill passes the House, it will collide with Senator Barbara Boxer’s expected version, which is predicted to call for funding at the level of $550 billion over six years.

Why am I calling this the “Construction Industry Unemployment Devastation Act?” Here is the arithmetic: Last fall, a panel of 80 experts on American infrastructure, headed by former Secretaries of Transportation Norman Mineta and Sam Skinner, concluded that maintaining U. S. infrastructure and meeting the needs of population growth should require investment of $262 billion each year, or a total of $1.57 trillion over six years. Senator Boxer’s bill is expected to propose about $550 billion over six years, or about 35% of the need. Mica’s bill which should come out today, will call for a mere $230 billion over six years, or just over 14.6% of the need. OUCH!!

Even the modest Boxer proposal would need an infusion of $12 billion, or $2 billion each year, from general federal revenues to make up for declining motor fuel consumption and a resulting shortfall in motor fuel tax revenue.

What this means for employment in the construction industry is that tradesmen who once worked for industry behemoths like Walsh, Bechtel or AMEC Morse Diesel will have to move overseas, or find work on crews remodeling houses, and the tradesmen now working in the home remodeling segment will end up at the unemployment office. It’s not a pretty picture, and the artists are those Republicans in the House who will do everything in their power to destroy any chance the Obama administration has of reviving the American economy before the 2012 elections.

Politics Is Strangling Infrastructure Bank Legislation

2011-06-26T16:06:00.000-07:00

Early last September, the Obama White House proposed a Federal Infrastructure Bank, which the construction industry hoped would bring a much needed infusion of private capital into more “shovel ready” projects, and help in starting a resurgence of the severely depressed construction sector of the American economy. Well, the shovels are still ready, but the infrastructure bank concept, like so many legislative initiatives for creating jobs, is mired in the politics of spending cuts and debt reduction.

The Obama Administration’s original proposal was creation of a permanent federal infrastructure bank, which would use grants, loans and loan guarantees to attract state and local funding, and private investment, to revenue generating transportation infrastructure construction projects. According to the September 9, 2010 White House press release, the proposed infrastructure bank would be:

“…an important departure from the federal government’s traditional way of spending on infrastructure through earmarks and formula based grants that are allocated more by geography and politics than demonstrated value. Instead, the Bank will base its investment decisions on clear analytical measures of performance, competing projects against each other to determine which will produce the greatest return for American taxpayers.”

Of course, that overt threat to end Congressional earmarks against the Highway Trust Fund probably assured the death of the infrastructure bank proposal from the Obama Administration. As a result, Obama’s February 14, 2011 budget message phrased the concept a little more elegantly:

“A cornerstone of the I-Bank’s approach will be a rigorous project comparison method that transparently measures which projects offer the biggest value to taxpayers and our economy. This marks a substantial departure from the practice of funding projects based on more narrow considerations.”

So, unlike the Obama Better Buildings Initiative, which has never even been introduced in the form of legislation, the infrastructure bank concept has at least left the starting blocks, in the form of SB 652, the BUILD Act, and SB 936, the AIIF Act. Neither piece of proposed legislation has even made it over the first hurdle, though.

Unfortunately, Senator Kerry's 57 page Building and Upgrading Infrastructure for Long-Term Development Act, Senate Bill 652, is bottled up since March 17 in the Senate Finance Committee, while Senator Rockefeller's 67 page American Infrastructure Investment Fund Act, Senate Bill 936, is bottled up since May 10 in the Senate Commerce, Science and Transportation Committee. Neither proposal is going anywhere, in my estimation, until two conditions are met: 1) our political leaders finish their cat fight over increasing the debt limit and reducing federal spending; and 2) someone proposes to support the federal highway trust fund with a source of infrastructure funding revenue as an addition to, or an alternative to, the current motor fuel tax.

The breakdown last week of the debt limit negotiations, and the Republican refusal to consider any new taxes, likely sound the death knell to both SB 652 and SB 936. In the absence of a massive letter writing campaign from construction businesses in favor of one or both of these proposals, there isn't going to be an Infrastructure Bank set up any time soon. If you would like to see an Infrastructure Bank get moving, write to your own Senators, and to members of the Senate Commerce Committee and members of the Senate Finance Committee in support of it.

Congress Stymies Better Buildings Initiative

2011-06-16T09:41:00.000-07:00

Politicians in both Republican and Democratic parties say they believe issue number one in the upcoming Congressional and Presidential elections is job creation. You would think this would make it easy to move legislative initiatives that would create jobs, conserve energy, and lower taxes. Yet one such initiative proposed by the Obama administration is so stalled in Congress that no one is moving any bill to implement the program.

On February 3, 2011, the White House proposed its Better Buildings Initiative, to improve energy efficiency of existing buildings, reduce the energy bills of businesses and consumers, and conserve energy. According to a report released Monday, June 13, 2011 by The U S Green Building Council, The Real Estate Roundtable and The Natural Resources Defense Council, the administration’s proposed program would create 114,000 new jobs, 77,000 of them in the severely depressed construction industry. The Better Buildings Initiative was also the subject of a portion of testimony by U. S. Department of Energy Assistant Secretary David Sandalow before the Subcommittee on Energy and Power of the House Committee on Energy and Commerce on June 3. As described, the Better Buildings Initiative will provide new tax incentives for building energy efficiency, new financing for retrofits of existing buildings, and streamlined building code provisions and performance requirements.

According to Roger Platt, a senior vice president of The Green Buildings Council, the Better Buildings Initiative will “lower energy consumption, reduce our nation’s dependence on foreign oil and allow America to retain its competitive edge in the international economy.” What’s not to like?

Congressional Committees with jurisdiction include: House Ways and Means, Chairman Dave Camp (R-MI) and its Select Revenue Measures Subcommittee, Chairman Pat Tiberi (R-OH); House Energy and Commerce, Chairman Fred Upton (R-MI) and its Subcommittee on Energy and Power, Chairman Ed Whitfield (R-KY); and House Science, Space and Technology, Chairman Ralph M. Hall (R-TX) and its Subcommittee on Energy and Environment, Chairman Andy Harris (R-MD). The websites of these committees and subcommittees are filled with diatribe attacking the Obama administration for inaction on the jobs and tax reduction fronts, yet there is no mention whatsoever of the Obama administration’s Better Buildings Initiative.

Republican politicians at all levels say they want lower taxes, less dependence on foreign oil, and more jobs. Private sector evaluation of the proposals in the Better Buildings Initiative says it will achieve all three goals. A polite letter to the committee chairmen listed above, pointing out that there should be strong bipartisan support for this proposal, and inquiring why it is going nowhere in the House, might kick some Republican butt, and get this job creator moving.

OSHA “Phasing In” New Residential Construction Fall Protection Standard

2011-06-15T07:26:00.000-07:00

Tomorrow’s deadline for compliance with the new OSHA guidance on residential construction fall protection, which can be found at http://www.osha.gov/doc/guidance.html, will be phased in for roofers and other residential contractors who may be in violation of the new directives, but still in compliance with the old alternative standards, according to OSHA Administrator Dr. David Michaels. Between June 16 and September 15 of this year, any residential construction contractor found to be in violation of the new directives, but who does comply with the old alternative standards, will receive only a “hazard alert letter,” while contractors not in compliance with either the old or new standards will be issued OSHA citations.

This three month “phase in” effectively amounts to a one year extension of the deadline in those states north of the Mason Dixon line, where the roofing season ends around September 15. Contractors in the South and Southwest regions will have to obtain equipment complying with the new directive by September 15 to avoid issuance of fall protection citations.

Now would be a good time for roofers and other residential contractors to take a good look at the new OSHA guidance, and plan their fall protection procedures under the new guidelines, while cash flow is available to support acquisition of the required bracket scaffolds or retractable lifelines for the use of their tradespeople.

Are You REALLY An Additional Insured On All Subs’ Coverage?

2011-06-14T22:33:00.000-07:00

General contractor G hires steel fabricator SF to fabricate and erect structural steel on the owner’s project. Fabricator SF hires steel erector SE to erect the beams and columns SF will fabricate in its shop. G’s subcontract with SF requires SF to name G as an additional insured on SF’s commercial general liability insurance. SF’s sub-subcontract with SE requires SE to name G and SF as additional insureds on SE’s commercial general liability policy. SE complies, and sends G a certificate of insurance showing G and SF as additional insureds on SE’s policy. Sound familiar?

Later, a couple weeks into erection of the steel on site, one of SE’s ironworkers falls and is injured. The ironworker files a workers’ compensation claim against SE, and a negligence lawsuit against SF and G. G, shown as an additional insured on the certificate provided by SE, tenders G’s defense in the negligence lawsuit to SE’s insurance company. If you would expect SE’s insurance company to defend and indemnify G, you would be mistaken, at least in Illinois, under the recent decision of the Illinois Appellate Court. Surprised?

In Westfield Insurance v. FCL Builders, 2011 WL 855197 (1st Dist. 2011), the court ruled that Westfield’s insurance policy language regarding the definition of who was insured required Westfield to provide coverage only when “you and such a person or organization have agreed in writing in a contract or agreement that such a person or organization be added as an additional insured on your policy.” The court found that SE’s promise to SF to name G as an additional insured was not enough to meet this requirement. Finding no direct written agreement between SE and G requiring SE to name G as an additional insured, the court ruled there could be no coverage for G under SE’s policy, in spite of the issuance of a certificate of insurance identifying G as an additional insured.

Perplexed? How can you fix this?

Easily enough! Besides requiring subs to require sub-subcontractors to name G as an additional insured, and submission of certificates of insurance reflecting that they have done so, G should require subcontractors and suppliers at all levels to submit, along with the typical certificate of insurance, a letter like this:

“Pursuant to a direct agreement among Owner, G and SE, and in consideration of Owner and G’s acceptance of SE as a trade contractor [or material supplier] on the project, SE hereby agrees directly with Owner and G to name Owner and G as additional insureds on SE’s commercial general liability insurance policy for the duration of the project, and is supplying the enclosed certificate of insurance from SE’s insurer identifying Owner and G as an additional insureds under SE’s commercial general liability insurance policy, together with a copy of SE’s policy and of the endorsement naming Owner and G as additional insureds.”

Of course, the ruling in the Westfield Insurance case was based on the particularly narrow wording of Westfield’s policy, but you can be sure this court decision will prompt many other carriers to modify their policy language accordingly. The simple expedient of requiring the above form of letter covering each and every insurance certificate, policy and endorsement on the project will protect general contractors against the fate that befell FCL Builders in this coverage case.

Ways And Means Considering Modest Tax Relief For Smaller Contractors

2011-06-10T22:04:00.000-07:00

Republican Congressman Walter Herger (R-CA), with cosponsors Shelley Berkley (D-NV) and David McKinley (R-WV), has introduced H.R. 1993, entitled American Job Builders Tax Reform Act, to provide some modest tax deferral for smaller construction contractors in the years beginning with calendar 2011. Yes, if the bill passes, it will apply for this calendar year’s taxes.

The legislation would permit construction businesses with annual gross revenues of up to $40 million to use the completed contract method of tax accounting for profits. Presently, only those contractors with annual gross revenues of $10 million or less are permitted to use completed contract tax accounting, while those with gross revenues over $10 million must use the percentage of completion method of tax accounting. H.R. 1993 would also increase the $40 million threshold each year to keep pace with inflation, according to the federal COLA.

The completed contract method of tax accounting permits deferral of income taxation on contractor profits until all work on a project is completed, and the business can accurately determine the amount of profit on the project, if any. Under the percentage of completion method, a construction business must pay taxes on the percentage of fee earned on all contracts in its tax year, even though the duration of some projects may make it impossible to determine whether or not a particular project will ultimately produce any profit at all.

H.R. 1993 has been referred to Congressman Dave Camp’s House Ways and Means Committee, where it will be considered by the Revenue Measures Subcommittee chaired by Representative Pat Tiberi (R-OH). Other members of the Revenue Measures Subcommittee include Representatives Rich Berg (R-ND), Shelley Berkley (D-NV), Charles Boustony (R-LA) John B. Larson (D-CT), Kenny Marchant (R-TX), Richard E. Neal (D-MA), Erik Paulsen (R-MD), Peter Roskam (R-IL), and Mike Thompson (D-CA).

If this bill will be helpful to your business, now would be the time to write to members of the subcommittee and let them know you support the legislation.

Would A Chicago Casino Bring Construction Jobs?

2011-06-02T13:33:00.000-07:00

Short answer: Maybe.

To begin with, the Chicago Casino Development Authority created by the bill now on Governor Quinn’s desk awaiting signature would have to decide whether it wants a land based casino or a riverboat. Chicago has no shipyard, so if the Authority opts for a floating mecca of gaming, the only construction jobs for Chicagoans would be those involved in the land side ancillary facilities like restaurants, taverns and a parking garage. This would cut the local casino construction workforce by about half.

If the Authority chooses a land based facility, the question is how construction of such a casino would be financed, given the cash strapped situation of city government and local taxpayers at the present moment. It would be possible for the Authority to attract private capital to the project by requesting proposals for private construction of the physical facilities, which would then be leased to the Authority for operation of the gaming establishment. Private investors would recover their capital investment with agreed upon earnings through lease payments from the Authority, while the Authority would not have to borrow in order to finance the construction. The land based casino would become operational faster, since private developers would be more free to employ an accelerated design/build program than the Authority, constrained by “lowest responsible bidder” requirements of public construction laws, could ever do.

Given that most of the sites proposed for development of the Chicago casino are on property already owned by others, it would be easy enough for the Authority to specify the details of casino construction through a leasehold work letter like the ones office building or store tenants use to set out the requirements for building out the space they will occupy in a leased building or space. The Authority would retain control of the appearance and layout of the finished product, while the private owner would finance and contract for construction of the facility. The work letter could even require the Authority’s landlord to adhere to City mandated requirements for minority and women participation, and use of local tradespeople on the project.

If Governor Quinn signs the bill, Mayor Emmanuel will appoint the members of the Authority board, and I look for the Board to do everything possible to attract private capital to construction of the new casino – on land if there is any political interest in keeping the construction dollars in the city rather than in a shipyard in another state. The same sort of legal arrangements used when our generous local philanthropists donated a quarter billion dollars to enhancement of Millennium Park can both attract private investment to a Chicago casino project, and avoid the delays inherent in public bidding and contracting for actual construction of the facility. Rahm is a very smart Mayor, and the precedents are all in place. I’m looking for a land based casino built with private funds, and leased by the Authority. Hammers could be swinging within a year if our political leaders act quickly.

Republican Union Busting Goes Federal

2011-05-31T15:41:00.000-07:00

The Republican sponsored push for labor union busting legislation, which has been steadily creeping eastward through state capitals from Madison through Indianapolis to Columbus, has finally arrived at the U. S. Capitol Building in Washington, D.C. Introduced by North Carolina Representative Virginia Foxx, and cosponsored by Representatives James Lankford of Oklahoma, Jason Chaffetz of Utah, Ron Paul of Texas and Lynn Westmoreland of Georgia, H.R. 1846 would repeal the Davis Bacon Act’s prevailing wage requirements on any construction contract paid for in whole or in part with Federal Highway Trust Fund money, if the invitation for bids on the project is issued after the effective date of the legislation.

The one page repealer bill is now in the House Committee on Transportation and Infrastructure and the House Committee on Education and the Workforce. If your Representative is on the sponsorship list for H.R. 1846, or is serving on either Committee to which the bill has been referred, now is the time to write and let them know your position on this anti-labor legislation.

Will Federal Highway Construction Dollars Ever Come Back?

2011-05-30T18:52:00.000-07:00

One of the many political issues in Congress which presently suffers from a dearth of press coverage amid the toxic debates over Medicare cuts, tax increases, budget slashing and the deficit ceiling, is the question of long term reauthorization of the Federal Highway Trust Fund. However, work on the Highway Trust Fund issue does continue in Washington. Joseph Kile, CBO’s Assistant Director for Microeconomic Studies, testified recently before Max Baucus’ Senate Committee on Finance about the status of the Highway Trust Fund. The picture Kile painted was not a particularly pretty one.

In his Finance Committee testimony, Kile outlined four potential scenarios for long term Highway Trust Fund reauthorization legislation: 1) funding highway projects for which benefits exceed costs; 2) spending enough to maintain highway performance; 3) maintaining current spending levels adjusted for inflation; or 4) limiting spending to revenues raised by existing motor fuel taxes.

Option 1) Funding projects where benefits exceed costs.

This option would involve significant increases from current spending levels, estimated at $209 billion per year from federal, state and local governments. If the current proportion of federal funding is maintained, this would mean Federal Highway Trust Fund annual expenditures would increase from the current level of $45 billion per year up to $94 billion per year. A somewhat less generous approach would involve setting a minimum threshold for the cost/benefit ratio. If federal funding were restricted to those projects for which benefits exceed costs by at least 20%, total government funding from federal state and local governments would drop to $188 billion per year, with the Federal Highway Trust Fund share decreasing to $84.5 billion per year. If the funding threshold were increased to 150% of costs, project funding would drop to $165 billion per year, and the federal share would drop to $74.2 billion per year.

Option 2) Spending at levels to maintain current highway performance.

Spending levels designed to merely preserve current average travel delays and pavement quality on federal highways would require all levels of government to spend a combined $127 billion per year, with the Federal Highway Trust Fund share approximating $57 billion, an increase of $12 billion above current Trust Fund spending levels.

Option 3) Maintaining current spending levels adjusted for inflation.

Current Highway Trust Fund spending levels of $45 billion per year, adjusted for inflation in construction costs, will exceed the revenues produced by current federal motor fuel taxes by $2.5 billion in fiscal 2011, and by $3.2 billion in 2012. Since the Highway Trust Fund is not permitted to go into a deficit position, even the modest option of maintaining current spending levels will require either annual make up appropriations from general revenues, an increase in federal motor fuel taxes, or additional user fees in the form of tolls or vehicle miles traveled taxes.

Option 4) Limiting spending to revenue from existing motor fuel taxes.

Limiting Highway Trust Fund spending to an amount equal to revenues produced by existing federal motor fuel taxes would result in an immediate reduction in federal highway expenditures from the current $45 billion per year down to about $30 billion per year. Funding at this level would increase deferred road maintenance and reduce new road and transit construction, resulting in accelerated crumbling of an already overstressed national transportation infrastructure.

Which Way Is Congress Headed?

Even if the Republican dominated House of Representatives would pass significant motor fuel tax increases together with new tolls or vehicle miles traveled taxes, the nearly universal inability of state and local governments to raise revenues to produce the required additional matching funds makes it very unlikely that we will see the federal transportation dollars represented by either option 1) or option 2) enacted in a long term Highway Trust Fund reauthorization measure in the foreseeable future. For the same reason, option 3) is less than likely since it would also require more state and local matching appropriations, though not quite at the astronomical levels represented by options 1) and 2). Even should a vehicle miles traveled tax be enacted to supplement revenue from motor fuel levies, the long lead time for adoption of the in vehicle metering technology required to assess and collect the new tax, together with the anticipated privacy objections to letting the federal government have a detailed GPS record of everyone’s minute by minute vehicle travel movements, will likely delay options 1), 2), and 3) for many years to come.

This makes option 4), an immediate one third reduction in Federal Highway Trust Fund expenditures, seem to be the most likely result in any long term Highway Trust Fund reauthorization measure coming out of the 112th Congress. Of course, the fifth alternative, unmentioned in Kile’s Committee testimony, is that Congress continues to limp along with quarterly or semi-annual highway trust fund reauthorizations, as it has for the last few years, awaiting a game changing House election for the enactment of any long term reauthorization legislation. So, will federal highway construction dollars ever come back? As I see it, not any time soon.

Congress Takes A Machete To The Construction Industry

2011-04-12T09:53:00.000-07:00

Voters, politicians and pundits from both ends of the political spectrum are busy praising the fiscal year 2011 continuing resolution agreed to in Congress last week to avoid a shutdown of the federal government. If you ever wore a hard hat, you should be weeping and gnashing your teeth!

The hastily slapped together last second agreement slashed $28 billion from funding levels for fiscal year 2010. Over $17.1 billion of those cuts come directly at the expense of the construction segment of the American economy. This bill is a construction job killer as deadly as though the Congressional intent was to permanently demobilize that entire sector of American productivity. Now that the detailed list of $28 billion in cuts has been released, it is clear that $17,187,000,000.00, or 61.38%, are at the expense of the construction industry.

It seems there was not a single staffer in the legislative or the executive branches of our national government in Washington who was assigned to look at the issue of the impact this politically expedient compromise would have on various facets of either the American economy or the recovery which is still in its infancy. While the focus of the conversation was on politically divisive “issue riders” which nearly brought Washington D. C. to a grinding halt, and whether the burden of federal debt reduction should be fastened onto the shoulders of the poor, who fear program reductions, or the rich, who fear tax increases, nobody was looking at the impact this bill will have on the unemployed middle class construction worker, whose hopes of returning to work any time soon are dashed month after month by the folks wearing neckties in the halls of Congress, who were assured of a paycheck even had the government shutdown materialized.

Whatever your political leanings, it would be difficult to fashion a cogent argument for placing well over half the burden of federal budget cuts on a single segment of American industry which represents only about 5% of our domestic economy.

Biggert Continues Her Assault On The Construction Industry

2011-03-30T08:16:00.000-07:00

Continuing her direct attack against any potential for recovery of new housing construction in America any time soon, 13th District Republican Representative Judy Biggert succeeded this morning in securing House passage of the fourth in a series of separate bills she cosponsored, terminating programs which provide relief to homeowners plagued by the economic crisis. Biggert is a cosponsor of HR 830, the FHA Refinance Program Termination Act, and HR 836, the Emergency Mortgage Relief Termination Act, passed by the House and sent to the Senate Banking Committee March 14, as well as HR 861, the Neighborhood Stabilization Program Termination Act, passed in the House March 17 and sent to the Senate Banking Committee. This morning the House also passed HR 839, the Home Affordable Modification Program Termination Act, cosponsored by Biggert, which will go to the same Senate Banking Committee.

Under Biggert’s leadership, the House has now succeeded in pushing through bills to completely gut all the programs in the Obama Administration stimulus legislation which gave some hope of stabilizing the tottering housing market, and stemming the bleeding in the housing start statistics so critical to recovery of jobs and activity in the construction industry. The fate of these critical programs is now in the hands of the 10 Republican, 12 Democrat Senate Committee on Banking, Housing and Urban Affairs. The Democratic members are Chairman Tim Johnson of South Dakota, and Senators Jack Reed of Rhode Island, Charles Schumer of New York, Robert Mendez of New Jersey, Daniel Akaka of Hawaii, Sherrod Brown of Ohio, Jon Tester of Montana, Herb Kohl of Wisconsin, Mark Warner of Virginia, Jeff Merkley of Oregon, Michael Bennet of Colorado and Kay Hagan of North Carolina. Republicans serving on the committee include Ranking Member Richard Shelby of Alabama, and Senators Mark Crapo of Idaho, Bob Corker of Tennessee, Jim DeMint of South Carolina, David Vitter of Louisiana, Mike Johanns of Nebraska, Patrick Tooney of Pennsylvania, Mark Kirk of Illinois, Jerry Moran of Kansas, and Roger Wicker of Mississippi.

While pundits predict all four bills will die in the Senate, or be vetoed by President Obama in the unlikely event they do pass, it is incumbent on every voter whose economic progress depends in any way on recovery of the construction segment of our economy to get in touch with the members of the Senate Banking Committee and let them know how important it is to construction companies and construction workers to see that this destructive legislation never reaches the Senate floor.

U. S. House Deals Construction A One/Two Punch

2011-03-20T18:10:00.000-07:00

Last week the U. S. House of Representatives passed, and sent across the capitol to the Senate Committee on Banking, Housing and Urban Affairs, two unheralded pieces of legislation which represent direct attacks on the potential for economic recovery in the construction industry and the U. S. housing market: HR 830, passed March 14, would terminate the FHA Refinance Program; and HR 861, passed March 17, would terminate the Neighborhood Stabilization Program. The two programs on the Republican Party death list were part of the stimulus package of legislation aimed at assisting homeowners, whose house values fell below the principal balances on their home mortgages, refinance their loans, and assisting neighborhoods with large numbers of foreclosed homes avoid the urban blight associated with a situation where many homes in the same area stand vacant and unmaintained.

The fate of these two programs is now in the hands of the 10 Republican, 12 Democrat Senate Committee. The Democratic members are Chairman Tim Johnson of South Dakota, and Senators Jack Reed of Rhode Island, Charles Schumer of New York, Robert Mendez of New Jersey, Daniel Akaka of Hawaii, Sherrod Brown of Ohio, Jon Tester of Montana, Herb Kohl of Wisconsin, Mark Warner of Virginia, Jeff Merkley of Oregon, Michael Bennet of Colorado and Kay Hagan of North Carolina. Republicans serving on the committee include Ranking Member Richard Shelby of Alabama, and Senators Mark Crapo of Idaho, Bob Corker of Tennessee, Jim DeMint of South Carolina, David Vitter of Louisiana, Mike Johanns of Nebraska, Patrick Tooney of Pennsylvania, Mark Kirk of Illinois, Jerry Moran of Kansas, and Roger Wicker of Mississippi.

Termination of these two federal programs will be like a knee to the groin of an already prostrate residential construction industry in the United States. Without the economic support from the federal dollars these two significant programs provide, housing starts, already on a steep slalom down the mountain, will just turn their tips into the fall line. Seems like the Republican Senators and Congressmen favoring these bills, who already own their homes, want to destroy the American Dream for anyone in the middle class who still rents housing. If your business depends on housing construction for any part of its revenue, you should write your elected representatives on the Senate Banking Committee and point out the folly passage of either one of these proposed laws would represent.

Goldilocks And The Obama Budget

2011-02-14T21:26:00.000-08:00

Today the Obama administration sent the House a $3.73 trillion budget proposal which would give the United States a first ever four consecutive year run of trillion plus deficits. Like Goldilocks and the beds in the three bears’ house, Congressional Republicans characterize the administration’s proposed spending cuts as too soft, Congressional Democrats say they are too hard, and the Obama White House says they are just right. By the time appropriations legislation passes through the Capitol, however, it won’t likely look like a bed at all. The White House proposal falls far short of Obama’s blue ribbon deficit commission’s recommendations for a $4 trillion deficit reduction.

The Obama budget proposal goes nowhere near the entitlement “third rail” of electoral politics. And, it contains a mixed bag of the bitter and the sweet for the construction sector of our economy. On the positive side, Obama proposes doubling the nation’s share of clean energy electric power by 2035; building high speed internet connections to reach 98% of American homes and businesses; $328 billion in additional funding for transportation infrastructure construction, from sources other than motor fuel taxes; and dropping cap and trade taxes on greenhouse gas emissions. In the negative ledger column, the budget would eliminate home mortgage interest deductions for households with income more than $250,000; $1 billion reduction in grants for airport construction; and another billion dollars cut from water treatment and other infrastructure construction programs.

House Budget Committee Chairman Paul Ryan (R. Wis.) is expected to unveil an alternative budget in April that will take a meat axe to entitlement spending. House Budget Committee Ranking Member Chris Van Hollen (D. Md.) defended the administration’s proposal: “Compared to the slash and burn Republican approach, [the administration’s] budget positions the president as offering a responsible approach to deficit reduction.

Housing Boom’s Walls of Jericho

2011-02-14T21:25:00.000-08:00

The housing boom during the first half of the last decade added over 10 million apartments, condominiums and homes to the U. S. housing stock. Now, however, just as the construction industry’s economic recovery is choking on the glut of foreclosed and unsold housing units, the prospect of any recovery for housing construction is further dampened by the tumbling of the walls of Jericho hastily erected and poorly fabricated during the overbuilt, easy money years of 2000 through 2005.

Three of Illinois’ most active home builders – Pulte, D. R. Horton and Lennar – are currently plagued by the financial fallout from a doubling of the rate of defects per new housing unit during 2000 through 2005, compared to the immediately previous six year period, according to estimates from the International Association of Certified Home Inspectors. Adding these woes to the ongoing multistate litigation over problems resulting from use of corrosive Chinese drywall products means the home building sector of the economy is facing a liability headache so tall even Superman couldn’t leap it in a single bound.

Pulte and D. R. Horton are the nation’s two largest home builders. In the third quarter, Pulte recorded a one time expense of $272.2 million – 25% of Pulte’s third quarter revenue – for increased reserves to cover losses for warranty repairs on homes built over the past 10 years. Similarly, Horton states its net liabilities for construction defect claims as of September 30, 2010, at $319.8 million, more than doubling the liability reserve Horton stated on September 30, 2003. Pulte CEO Richard J. Dugas told securities analysts that the huge increase in defects reserves “was completely unforeseen.” The housing sector issues, and corporate accounting for burgeoning liabilities, bother Towers Watson actuary Ron Kozlowski. “Their liabilities are underfunded,” Kozlowski contends. He remarks that home builders “have their heads in the sand.”

Meanwhile, 13 customers who bought new homes from Lennar in Hutto Parke, a subdivision of an old cotton plantation 30 minutes outside Austin, Texas, are suing for fractured foundations, drooping ceilings and sagging fences because, they contend, the homes were put up on unstable soil. Lennar has already settled claims by 221 of the 443 homebuyers in Hutto Parke.

In today’s liability insurance market of ever tightening claims made policy forms, little if any of these claims asserted against housing contractors will be covered by any sort of insurance, and the builders will have to dig deep into shareholder pockets to pay the resulting attorney fees and costs of litigation, as well as the customer recoveries against them. As if the housing sector didn’t have enough problems getting out of the starting blocks and running the high hurdles toward economic recovery.

Illinois Tax Hikes Driving Business Investment Out Of State

2011-02-14T21:23:00.000-08:00

Knowledgeable observers predicted early in this legislative session that a major hike in state taxes would drive business investment out of state, and developments in neighboring states are already proving them correct. For example, 112 commercial and industrial construction projects worth $8.9 billion are already underway in 2011 just across the lake in Michigan.

The electric power industry in Michigan leads the way with 37 projects totaling $5.2 billion, representing 58% of new industrial construction investment in Michigan for 2011. The largest single power industry project in Michigan is the 765 KV Lower Peninsula Transmission Line, a 700 mile overhead extra high voltage transmission line extending into Ohio. American Electric Power Company will commence construction of this project this summer.

General industrial manufacturing construction, including auto industry plant expansions, accounts for 20 projects worth $1.4 billion, followed by 21 pharmaceutical and biotechnology investments totaling $467 million.

Illinois could have benefited greatly from the jobs created by this construction investment, as well as the new jobs in the completed or expanded facilities. Our state economy desperately needs new high tech jobs, but the income tax increase enacted by our legislature and signed by our governor is driving the money, construction jobs and manufacturing jobs across the lake.

Republican Subcommittee Chairman Lauds Obama Housing Smackdown

2011-02-12T13:16:00.000-08:00

Illinois’ 13th District Republican Representative Judy Biggert, Chairman of the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity, is looking forward to joining with other committee Republicans to quickly extract the federal government from its role as primary financial risk taker in the housing market in this country. Joining in the Obama Treasury Department attack on any continuing role for federal housing subsidies in the form of residential mortgage guarantees, Biggert said in her E-mail message to constituents yesterday: “Taxpayers cannot continue to shoulder the financial risks associated with [federally chartered mortgage guarantors] Fannie [Mae] and Freddie [Mac]. … Our goal should be to choose a path that will quickly and prudently wind down the government’s role and restore stability to the housing market.”

In other words, Republican leaders are climbing aboard the Obama Treasury train of proposed measures which will raise home mortgage interest rates, cut back availability of 30 year fixed rate mortgages to even the most creditworthy borrowers, and altogether eliminate availability of low down payment lending to first time homebuyers. If you don’t already own your home, the American Dream may be pulling out of your station and rapidly receding into the distance as the train whistle hoots its demise. In a long awaited white paper released yesterday by Treasury, the Obama administration proposes cutting the size of mortgages Fannie and Freddie can purchase from private lenders, from the present $729,750 down to $625,500 as soon as the third quarter of 2011. Minimum required down payments will go up to 10% for conventional loans, and rise from the current 3.5% up to 5% for FHA first time buyer mortgages.

Finally, Treasury proposes increasing the fees Fannie and Freddie charge conventional lenders for guaranteeing the mortgages these lenders underwrite.

In a related Obama administration attack aimed specifically at lower income home owners, the administration proposes a $2.5 billion reduction in the LIHEAP home heating fuel assistance program. What’s the point in owning your home if you can’t afford to heat it?

While, admittedly, excesses in home mortgage lending, and the securitization of home loans into derivative instruments, contributed heavily to the near collapse of worldwide financial markets and drove the U. S. economy into the worst recession in decades, it is beginning to look like the Obama administration’s use of a purgative on Fannie Mae and Freddie Mac could be the cure that proves worse than the disease. Available credit for both the construction and purchase of new homes has already dried up into a syrupy consistency clogging the arteries of any hope for quick recovery in the construction sector of the American economy, and the Obama Treasury Department recommendations for home mortgage market reform will keep construction workers, trade contractors and home builders on the sidelines of the economic recovery for years to come.

Ireland and China Back Obama’s Clean Energy Policy in Illinois

2011-01-27T09:10:00.000-08:00

President Obama’s bold new goal that “by 2035, 80% of America’s electricity will come from clean energy sources” will be getting hard dollar backing from China’s Xinjiang Goldwind Science and Technology Company Ltd. and Ireland’s Dublin based Mainstream Renewable Power, Ltd. which plan to begin construction this coming July of the Shady Oaks wind farm in Lee County’s Brooklyn Township near Compton, Illinois. Last month the Illinois Power Agency awarded Goldwind the successful bid on the 106.5 megawatt Shady Oaks project, which will consist of 71 Goldwind 1.5 megawatt permanent magnet direct drive wind turbines, and is planned to produce enough power for 30,000 homes in the community.

Goldwind and Mainstream expect to spend about $200 million building the wind farm, which is projected to produce 120 construction jobs and 10 or 12 permanent jobs once the project goes into commercial operation. The Shady Oaks wind farm will sell electricity to Commonwealth Edison under a 20 year power purchase agreement. Commercial operation of the facility is planned for the second quarter of 2012.

Major U. S. manufacturing participation in the project comes through Goldwind’s purchase of $26 million in bearings for the wind turbines from Canton, Ohio based Timken Company.

Goldwind USA CEO Tim Rosenzweig remarked: “We are elated to have been selected to build this project and to bring critical jobs and opportunity to the local wind industry in Illinois.” Mainstream CEO Eddie O’Connor chimed in with the comment: “Our success today comes down to the strength of our relationship with Goldwind and our joint mission to provide low-cost, reliable renewable energy to the U. S.”

State of the Union – What’s In It for the Construction Industry?

2011-01-26T16:41:00.000-08:00

President Obama is a Chicago bred politician, and as such he knows road building contractors are some of the most generous political donors among business people. Yet, in his State of the Union speech, he only glanced briefly in their direction. And, while clean energy construction also got a brief nod, there was nothing specific in the speech for either construction industry sector to hang its hat on. Furthermore, events in the House of Representatives since the speech ended make any hope of significantly increased infrastructure spending legislation look bleaker than ever.

True, Obama did vaguely refer to a budget that will invest “especially [in] clean energy technology,” and proposed taking subsidy dollars from oil companies and using them to set “a new goal: by 2035, 80% of America’s electricity will come from clean energy sources.” Does this mean his plan is to raise oil and natural gas prices to levels which will make “clean” electricity economically competitive?

Obama proposed that the executive branch should seize control of the allocation of federal infrastructure funding from Congress by throwing down the gauntlet with this bold and impractical challenge: “If a bill comes to my desk with earmarks inside, I will veto it.” That should serve to bring federal expenditures for infrastructure construction to a screeching halt. Unless, of course, he means the earmarks will already be inserted into his proposed budget legislation.

During the middle of the address, Obama said a few things which sounded promising for the construction industry. “The third step in winning the future is rebuilding America.” He mentioned high speed rail – for which billions were appropriated in the stimulus package – and which is already meeting resistance from newly elected Republican governors in some of the states which won high speed rail stimulus grants. He promised to “put more Americans to work repairing crumbling roads and bridges.” However, three pages down the teleprompter, he also proposed to “freeze annual domestic spending for the next five years.”

In the tempest of House leadership changes, and the absence of detailed proposals from either side of the aisle, it is difficult to say what these remarks will translate into in terms of appropriations legislation, other than to predict, “not much.” The federal Highway Trust Fund reauthorization legislation is now in the hands of the House Transportation and Infrastructure Committee, which just held its first organizational meeting this morning under the leadership of Chairman John L. Mica of Florida and Highways and Transit Subcommittee Chairman John J. Duncan, Jr. of Tennessee. No one yet knows what is on the Committee’s agenda, or for that matter on the Obama administration’s agenda, by way of fulfilling Obama’s State of the Union promise that long term Highway Trust Fund reauthorization legislation will be “fully paid for, attract private investment, and pick projects based on what’s best for the economy,” other than Congressman Duncan’s statement that “Increasing the gas tax is not the solution to addressing our infrastructure needs.”

Yes, we knew that two years ago when the Democrats ruled the House. So far, neither side of the aisle has put forth a viable alternative to higher motor fuel taxes, however. Congressman Duncan’s subcommittee website says “We must eliminate unnecessary bureaucratic red tape so that infrastructure projects can be built in half the time and taxpayer funds can be spent more efficiently.” Are they talking about eliminating environmental impact reviews?

In a statement issued just this morning, Duncan announced that “Today the House of Representatives passed a resolution to roll back non-security spending to 2008 levels.” At that pace, no motor fuel tax increase would be required to replenish the Highway Trust Fund.

So, despite the rhetoric, or perhaps because of it, I can be confident of only one thing: there won’t be any significant increase in infrastructure funding at the federal level any time soon.

Another Blow To Illinois Clean Energy

2011-01-13T06:38:00.000-08:00

The waning hours of the lame duck Illinois Senate session struck another blow against clean power generation in Illinois as the Illinois Senate defeated by a vote of 33-18 a bill authorizing Tenaska, Inc. to proceed with construction of the proposed $3.5 billion coal gasification/carbon capture and sequestration power plant near Taylorville. Over the last five years the State of Illinois has invested $23 million of the $40 million spent by Tenaska in planning and development expenditures for the proposed project.

Taylorville Mayor Greg Brotherton, who hung around the statehouse during the final vote in the wee hours of Wednesday morning, remains optimistic Tenaska may find other sources of funding to complete construction of the facility, though he expressed exasperation at the workings of the Illinois legislature. “It was a learning experience for me the past five or six weeks, and seeing how the legislature works, it’s just unreal,” Brotherton exclaimed.

Mary L. Renner, Director of the Taylorville/Christian County Economic Development Corporation, said the Energy Center site remains viable for other energy related development even if Tenaska pulls out of the carbon capture/coal gasification project. “To be able to draw this kind of attention says a great deal for the natural resources there,” said Renner.

Opponents of the bill asserted that the legislation would have required Illinois electric utilities to purchase power from the newly built facility at above market prices for the next 30 years in order to recover the state subsidized cost of building and operating the environmentally conscious, greenhouse gas limiting facility. “It would have been damaging to the state’s job-creation climate,” said Philip O’Connor, chairman of the Coalition to Stop Tenaska’s Overpriced Power.

Tenaska vice president Bart Ford said his company is not yet prepared to say it will walk away from its own $40 million dollar investment in the project, despite the Illinois Senate’s resounding defeat of the authorizing legislation. “We are currently evaluating our next course of action,” said Ford. “We believe there is a great deal of support in Illinois for the idea of clean coal power.”

The apparent collapse of this local effort at greenhouse gas control puts Illinois in the company of several European carbon capture and sequestration projects which have faltered due to the unfavorable economic factors involved in bringing carbon capture technology up to commercial scale.

Carbon Capture Takes Another Hit

2010-12-13T06:48:00.000-08:00

The Obama administration’s pledge of $1 billion for construction of a major commercial scale power plant carbon capture project in Illinois, dubbed FutureGen 2.0, took another hit today with announcement of the economic failure of yet another in a series of European carbon capture projects subsidized by the European Commission. Illinois’ FutureGen 2.0 is a proposed a network of pipelines to deliver the sequestered carbon dioxide to a repository in Mattoon, where it would be stored underground, along with emissions from other plants in the region should the commercial scale carbon capture technology prove successful.

The 2.0 version of FutureGen is a scaled down version of an earlier, more ambitious project which began as planned construction of a ground up new 275 megawatt clean coal power generation facility in Mattoon, under the Bush administration. When the estimated $950 million price tag for the coal gasification facility more than doubled as construction estimates were finalized, FutureGen was revised to version 2.0 - revamping Ameren Corporation’s 200 megawatt Meredosia coal fired power facility with advanced combustion techniques, a new boiler, and an air separation unit to capture 90% of the carbon dioxide emissions.

The fourth hit in three months to carbon capture construction in the European Union came today with announcement of the financial failure and anticipated bankruptcy sale of Powerfuel plc’s proposed carbon capture facility at its 900 megawatt coal fired Hatfield power plant in South Yorkshire. Netherlands based accounting and consulting firm KPMG has been appointed administrator for the Powerfuel project. According to KPMG’s Richard Fleming, the Hatfield carbon capture development falls $1 billion short of capital investment needed, despite European Commission grants of $275 million in subsidies for the project.

Last October, Germany’s energy giant E.ON announced it was terminating development plans for carbon capture and sequestration on a commercial scale at its billion and a half megawatt coal fired power plant in Kingsnorth, U.K. That news was followed swiftly in November by announcement that both commercial backers bowed out of Finland’s carbon capture project at Meri Pori, and Royal Dutch Shell’s termination of plans for an underground carbon dioxide storage facility at Barendrecht.

Despite Powerfuel’s status as the only UK licensee for commercial scale carbon capture technology trials, and projections by UK’s Department on Energy and Climate Change that that carbon capture and sequestration is one of the cheapest forms of low carbon energy production, KPMG’s Fleming described the reasons for the financial failure of the Hatfield project: “Developing low-carbon energy generation requires a large amount of capital up front, and the CCS development falls $1 billion short of the investment needed to build the plant. … The substantial funding gap has not been addressed in the past 12 months, and accordingly the project has stalled.”

In light of this series of dramatic failures of carbon capture projects overseas, the silence from both Springfield and Washington about the prospects of completion for FutureGen 2.0 is deafening.

Unemployment Benefit Extension Returns To Front Burner

2010-12-09T04:37:00.000-08:00

In a deal struck between President Obama and Senate Republican leaders, legislation extending federal unemployment benefits for an additional 13 months, up to a total of 99 weeks, could be on the way to passage in both houses of Congress very soon. Trading the unemployment extension desired by Democrats for extension of Bush era tax cuts to even the wealthiest Americans for 2 years, Obama went against the grain of his own party politically. In his own defense, Obama said at a press conference yesterday “A long political fight carried over into next year might have been good politics, but it would be a bad deal for the economy, and a bad deal for the American people.”

The compromise package, carrying a price tag of a $700 billion increase in the nation’s deficit, includes the tax cut extensions, unemployment benefit extensions, a 2% cut in FICA taxes withheld from paychecks of working Americans, reinstatement of a 35% estate tax on inheritances of more than $5 million from a single decedent and $10 million per couple, and extension of the college tuition tax credit due to expire December 31, 2010. Also, businesses making capital investments next year will be permitted to expense the entire amount, rather than amortizing it over the life of the asset. The tax savings in 2011 are expected to total $120 billion for wage earners, and $150 billion for businesses.

Defending the deal, which comes on the heels of dual Senate defeats for proposals to extend the Bush era tax cuts only to families earning less than $250,000 per year, and then only to those earning over $1 million per year, Obama said: “The number one priority is doing what is right for the American people.”

Republican “Green” Legislation

2010-12-09T04:35:00.000-08:00

Sitting on President Obama’s oval office desk for the past 5 days is a piece of legislation described by House and Senate Republicans as “green” legislation to create cutting edge energy conservation technology jobs. Called the Federal Buildings Personnel Training Act, and designated HR 5112 in the House and S 3250 in the Senate, the bill is supposed to cut federal government energy costs and train the federal building maintenance work force in the use of high performance technologies for energy conservation in federal buildings.

About 97% of federal office buildings use private contractors to maintain and manage the facilities, and according to House co-sponsors Judy Biggert (R-Ill.) and Russ Carnahan (R-Mo.), the legislation should cut the $7 billion spent annually on heating, cooling, powering and lighting federal facilities. GSA expects every dollar spent on training under this legislation to return $3.95 annually in energy cost savings. Senator Susan Collins (R-Me.), cosponsor of S 3250, quotes GSA as complaining that contractors responsible for managing federal facilities “lack qualified, well-trained people” to manage more than 500,000 federal buildings, structures, associated infrastructure and other physical assets in the U. S. and around the world.

The legislation was presented to Obama December 3, and awaits his signature. Interesting that the Republican climate change deniers were the ones to sponsor this bill in both houses. The stimulus legislation they have been complaining about for nearly 2 years appropriated $5.5 billion to GSA for upgrading energy efficiency of federal facilities, and ever since, GSA has been complaining that lack of proper expertise among facility operating personnel was a major roadblock in reaching federal government energy reduction goals. Once the bill is signed into law, training for the operators of the numerous federal buildings in the Chicago area should kick into high gear.

Rationality and Experience to Guide Chicago Housing and Economic Development

2010-11-21T10:17:00.000-08:00

Outgoing Mayor Richard M. Daley is intent on leaving his imprint on city government even after he leaves office early next year. He is busy reorganizing the city’s administration in the way he thinks best, and appointing interim heads to new departments, leaving the next mayor to decide whether or not to keep them. Kudos to Daley for one interim appointment announced last week, which should keep economic and housing development moving in all Chicago neighborhoods during the inevitable transition confusion once a new mayor is elected.

Daley appointed 58 year old Andrew Mooney, executive director of Local Initiatives Support Corp. Chicago, to be interim head of the newly created Department of Housing and Economic Development. The new department combines the responsibilities of the former Department of Community Development with the former Department of Zoning and Land Use, except for zoning inspections, which will now fall under authority of Chicago’s building department.

Mooney brings enviable experience in making community development work to his new position. Since it was started in 1980, his organization has invested $150 million in grant money in Chicago area neighborhoods, developing 27,000 housing units and 4.5 million square feet of retail, commercial, and community center space. Mooney’s able leadership has also attracted equity investment totaling $317 million to projects his organization supported, leveraging an estimated $3.7 billion in development throughout the Chicago metropolitan area. Some examples of housing developments succeeding under Mooney’s leadership include the 86 unit Churchview Supportive Living Facility in southwest side Chicago Lawn, the 87 unit Harold Washington Unity Cooperative affordable housing development in West Humboldt Park, and Bronzeville’s 3,000 unit Oakwood Shores development, located just south of Ellis Park.

There are so many candidates for mayor running in the February election that it is impossible to predict the outcome, much less the appointments of department heads a newly elected mayor might make. We can only hope that whichever candidate ultimately replaces Daley has the good sense to keep Mooney’s knowledge, experience and motivation working for Chicago’s neighborhoods after he or she takes over the reins.

High Speed Rail Shuffle Could Be Chicago’s Boon

2010-11-20T16:43:00.000-08:00

Newly elected governors in Wisconsin, Ohio and Florida – all of whom have announced their opposition to high speed rail construction projects in their states – could be the secret ingredient in increased funding for high speed rail construction projects and rolling stock manufacturing jobs in the Chicago area. Under the stimulus appropriations from early 2009, $8 billion was set aside to fund high speed rail construction projects planned but not yet implemented across the United States. In January of this year the Obama administration announced allocation of $1.23 billion of that money to Illinois, to fund high speed rail corridors between Chicago and St. Louis, Missouri, and between Chicago and Milwaukee, Wisconsin.

Of the remaining $6.77 billion in high speed rail appropriations, $810 million was awarded to Wisconsin for construction of a high speed line between Milwaukee and Madison, and also the Wisconsin portion of the Chicago to Milwaukee service. Another $400 million was awarded to Ohio, for high speed connections between that state’s capitol, Columbus, and Cleveland and Cincinnati, Ohio’s other two major cities. Florida was awarded $2.06 billion for a high speed rail link between Orlando and Tampa.

Under the “claw back” provisions of the stimulus legislation, any money allocated to particular projects, but not spent by the states winning the funds, must be reallocated among other proposers who got less than they asked for in the initial grant process. Florida’s governor elect Rick Scott, Ohio’s governor elect John Kasich, and Wisconsin’s governor elect Scott Walker have all publicly stated their opposition to going forward with the high speed rail construction for which these federal stimulus funds were awarded, putting a total of nearly $3.29 billion back in play among the states seeking federal funds for high speed rail development projects.

IDOT’s original funding proposal under the stimulus appropriation sought a total of $4.5 billion, and the clawed back funds could more than make up the entire shortfall from the Illinois grant request. Though it is unlikely Illinois will be given the entire amount, U. S. Transportation Secretary Ray LaHood said last Monday, November 15, that he will soon be announcing the reallocation of the $1.2 billion coming back from Wisconsin and Ohio. Several governors who support high speed rail development, including Illinois Governor Pat Quinn, will be holding their breath until LaHood’s announcement is official, and maybe even longer, until Florida’s $2.06 billion grant is reallocated.

Quinn is already wooing Talgo, Inc. the rolling stock manufacturer that recently opened a plant in the Milwaukee facility formerly owned by Tower Automotive, where Talgo expected to put 125 people to work building cars for the Chicago to Milwaukee high speed rail corridor, which plans to include stops at Mitchell Field, Sturtevant, Wisconsin, and Glenview, Illinois, as well as the terminals in downtown Chicago and Milwaukee. Talgo has said it would consider moving to Illinois after fulfilling its spring 2012 orders for two high speed trains in Oregon.

So, because of politics in three other states, Illinois could end up a much bigger winner in the competition for high speed rail funding and jobs that initially seemed possible.

House Rejects Unemployment Extension

2010-11-19T11:08:00.000-08:00

Yesterday the House of Representatives voted on a bill to extent the application deadline for the next tier of federal unemployment benefits to February 28, 2100, and the bill was defeated 258 in favor to 154 against. The legislation would have required 275 votes in favor to pass under pay as you go rules, since it included no revenue raising measure to pay the $12.5 billion cost of the benefit extension. As a result, up to 4 million out of work citizens, and their families, will lose their jobless benefits on the current filing deadline, which is November 30, 2010.

State governments pay the first 26 weeks of unemployment benefits, and after that additional federal payments can last up to an additional 73 weeks, for a total of 99 weeks of benefits: just 5 weeks short of 2 years before payments are cut off. The last extension passed by Congress was for 6 months at a cost of $34 billion. In the last 3 years the unemployed have collected $319 billion in jobless benefits, with 8.5 million citizens now collecting benefits. Of the 8.5 million, 4.8 million have already exhausted their state benefits, and are now collecting federal payments.

The federal government has never cut off benefit extensions when the unemployment rate has been above 7.4%. With today’s rate at 9.6%, Congress is likely to ultimately pass further extensions, but not before the November 30 cutoff. The debate rages on in the House about how to pay for the cost of an extension, which Democrats argue should last another year. Republicans want to use unspent stimulus money to pay for the extension, but Democrats oppose raiding any pot of money appropriated for job creation.

The House/Senate Joint Economic Committee reports that failure to continue extended unemployment benefits could take as much as $80 billion out of today’s already weakened economy, since families receiving benefits spend the money immediately because they are already living so close to the edge financially. Nevertheless, deficit hawks in the House will likely continue to oppose any bill not fully funded under pay as you go rules.

Dodd-Frank Consumer Credit Reforms Under Assault

2010-11-19T11:07:00.000-08:00

Do you accept credit cards in payment from your customers? Does your business use credit cards to pay vendors? Either way, you will be affected by the new consumer protection rules to be promulgated by the Consumer Financial Protection Bureau under the Dodd-Frank financial regulatory reform bill signed by President Obama in July. One of the top Republican congressmen on the Financial Services Committee, Representative Jeb Hensarling of Texas, has promised to defund the Bureau once the new Republican House majority assumes power in January.

Other incoming House Republican leaders, including presumptive Majority Leader Eric Cantor of Virginia, and leading Financial Services Committee chair candidates Spencer Bachus of Alabama and Ed Royce of California, are expected to introduce legislation revoking the independent funding of the Bureau from the Federal Reserve which is set to begin in July, 2011. Royce has also proposed giving bank regulators the power to veto any Bureau rules.

Republican Congressmen and banking industry lobbyists are attacking the rulemaking powers of the Bureau, because President Obama is likely to veto any Republican backed legislation weakening the power of the new regulators, headed by Harvard Law Professor and consumer advocate Elizabeth Warren. Republicans believe subjection of the Bureau’s budget to the annual Congressional budgeting process will subject the Bureau’s exercise of its rulemaking powers to increased political pressure from a Republican dominated House, where appropriation measures must originate.

Europe’s Failures Jeopardize Illinois Carbon Capture Project

2010-11-19T11:05:00.000-08:00

Reversals of fortune as far away as Finland could jeopardize the future of Illinois’ FutureGen 2.0 project, to which the Obama administration pledged $1 billion in stimulus funds as recently as last August. FutureGen 2.0 began as planned construction of a ground up new 275 megawatt clean coal power generation facility in Mattoon, under the Bush administration. When the estimated price tag for the coal gasification plant of $950 million more than doubled as construction estimates were finalized, FutureGen 2.0 was revised to revamping Ameren Corporation’s 200 megawatt Meredosia coal fired power facility with advanced combustion techniques, a new boiler, and an air separation unit to capture 90% of the carbon dioxide emissions.

Babcock & Wilcox and a group of energy companies proposed a network of pipelines to deliver the sequestered carbon dioxide to a repository in Mattoon, where it would be stored underground, along with emissions from other plants in the region should the commercial scale carbon capture technology prove successful. Now, the failure of two proposed European commercial scale carbon capture power plant projects suggests the Meredosia project may never come off the drawing boards.

Finland’s Fortum Oyj and its partner Teollisuuden Voima Oyj have both backed out of a proposed 565 megawatt carbon capture project at Meri Pori, Finland, because they say the project presents too many technological and financial risks. Also this month, Royal Dutch Shell dropped a proposal for piping carbon dioxide emissions from its Rotterdam area Pernis refinery to a proposed underground storage facility beneath the small village of Barendrecht in The Netherlands. Citing three years of delays and “the complete lack of local support,” Dutch Minister of Economic Affairs Maxime Verhagen announced scrapping of the Barendrecht carbon capture and storage facility.

Last month, Germany’s energy giant E.ON announced it was terminating development plans for carbon capture and sequestration on a commercial scale at its billion and a half megawatt coal fired power plant in Kingsnorth, U.K.

The fact that European technology leaders in industry and government in Finland, Germany, England, and The Netherlands are concluding in rapid succession during the design phase that commercial scale carbon capture and sequestration is not economically viable, combined with Illinois’ own experience of projected cost overruns totaling more than 100% on the original version of FutureGen 2.0, could eventually scotch the Meredosia/Mattoon project, despite political support in both Springfield and Washington, D.C.

Gradual Fuel Tax Hike Proposed

2010-11-09T17:11:00.000-08:00

Mindful of the burgeoning federal deficit, yet equally mindful that the federal Highway Trust Fund reauthorization legislation is mired in the House, and finally mindful that infrastructure construction projects will keep folks working as long as funding is in place, Republican Senator George Voinovich of Ohio and Democratic Senator Tom Carper of Delaware have proposed to the Obama administration debt commission that motor fuel taxes be gradually increased one penny every month for the next 25 months. Touted as a debt reducing and jobs creating measure, the proposal would go a long way towards funding the needed $500 billion, six year Highway Trust Fund reauthorization. If the lame duck Congress can get the measure through both houses before the anti-infrastructure Republican majority takes over next year, it could help save the heavy construction sector from the complete disaster that awaits if Congress elects to depend on year by year reauthorization measures that choke long term infrastructure planning by state and local governments which depend on the Highway Trust Fund for 75% of the money they spend each year.

So far, this is the only practical funding increase suggestion to come out of a Congress already deadlocked over the reauthorization legislation so important to keeping our roads, bridges, waterways and drinking water systems in good repair over the long term. As it is, state and local governments will be hard pressed to come up with their 25% matching contribution to keep infrastructure projects moving forward during the near future.

U. S. Northeast Sees Construction Investment Launches

2010-11-09T17:10:00.000-08:00

Delaware, New Jersey, New York and Pennsylvania are looking forward to fourth quarter launches of planned major construction projects with a total investment value of over $2.3 billion. Leading the way are the industrial manufacturing and biotech-pharmaceutical sectors of the economy, with 25 biotech or drug making projects worth $572 million, and 17 industrial manufacturing projects worth $715 million.

Examples include the $175 million Fisker Automotive renovation and expansion of the former GM plant in Wilmington, Delaware, to produce plug in hybrid cars, mostly for export. The completed 3.2 million square foot facility is expected to go into production in 2012, and to be making up to 100,000 cars and trucks a year by 2014. One of the big biotech projects will be expansion of the Cornell University Department of Food Science Stocking Hall laboratory to a 145,000 square foot facility at an investment of $105 million under the construction management of Gilbane Building Company. Construction of the Stocking Hall expansion at Cornell is expected to take four years.

Husky Energy Moves Forward on Diesel Desulfurization

2010-11-09T17:08:00.000-08:00

Calgary based Husky Energy Inc. plans a diesel hydrogen treatment facility with capacity to produce 25,000 barrels per day of low sulfur diesel fuel, with construction to begin in 2013. Approval for construction is expected in 2012, with selection of an engineering, procurement and construction contractor the same year. Husky is a refiner, marketer and distributor of gasoline, diesel fuel, asphalt, ethanol, and aviation and specialty fuels in Canada and the U.S.

Alternative Energy Policy Vacuum Takes Its Toll

2010-11-06T10:01:00.000-07:00

The lack of a comprehensive national policy for alternative energy sources and alternative fuels continues to take its toll on the industry, and with Republican control of the House of Representatives, we can only look for more such disasters. On Wednesday, November 10, a brand new, 90% complete facility designed to annually produce 20 million gallons of fuel ethanol and 3.2 megawatts of electric power will go under the auctioneer’s gavel in Heyburn, Idaho. Owner of the new plant, Renova Energy of Idaho, LLC, filed chapter 11 bankruptcy last year, after halting construction, with the factory more than 90% complete, in 2008. Construction started in 2007.

The facility will be sold as is and in place, or if that does not succeed, equipment and structures will be auctioned off piece by piece. Renova’s plant would have been only the second ethanol facility in the State of Idaho. With very little prospect of Congressional action on national energy policy legislation any time soon, given the outcome of this week’s elections, it seems unlikely a buyer willing to complete construction and put the Renova factory into operation will come forward.

Stimulus High Speed Rail Curtailed

2010-11-05T18:36:00.000-07:00

The first fallout of the election returns came down in Wisconsin today, with the announcement by the outgoing Democratic Doyle administration that design and engineering work on the $810 million stimulus funded Milwaukee to Madison high speed rail construction project will be suspended, pending a determination by the incoming Republican Walker administration. Wisconsin Transportation Secretary Frank Busalacchi says the stoppage is temporary, but governor elect Walker campaigned against high speed rail as a waste of taxpayer money.

Permanent cancellation of the extension of high speed rail from Milwaukee to Madison would imperil jobs at the Milwaukee plant of Spanish based Talgo, Inc, which was slated to manufacture new rolling stock for the Madison branch, where the intent was to increase train speed from the current 79 mph up to 110 mph along the route.

Additionally, Ohio governor-elect John Kasich has also reiterated his opposition to development of a high speed rail corridor in that state connecting Cincinnati, Columbus and Cleveland. It seems the $8 billion in federal dollars allocated to high speed rail construction in the stimulus package may never get spent after all.

The New Republican Agenda

2010-11-05T18:35:00.000-07:00

According to Republican Representatives heading back to Washington, D.C. after the election recess, their emphasis in Congress will be on job creation and economic recovery. Their first priority – making the Bush tax cute permanent. They expect Obama and the Democrats to cave in to this legislation. Ohio’s John Boehner, expected to be elected speaker once the lame duck Congress comes to a close, announced in a Wall Street Journal piece today that the next Speaker should take four immediate steps to restore voter confidence in the federal government: 1) no more earmarks for favorite projects in appropriations legislation; 2) no floor votes on legislation that has not been available on line to the public for at least three days; 3) no more unfocused, thousand page bills with spending priorities and policy changes buried in incomprehensible bureaucratic text; and 4) no more secret drafting of legislation in the Speaker’s office rather than through the open committee hearing process.

Call me a cynic, but I expect if Boehner is elected speaker, his adherence to these four principals will last just until the first House Bill in the new congress comes to the floor for a vote. I hope he proves me wrong.

Unfinished Business In Congress

2010-11-03T18:39:00.000-07:00

The Republican sweep to power in the House virtually assures that the unfinished business on the Obama administration agenda will not be finished any time soon. Most important to the construction industry is reauthorization of the federal highway trust fund, which Congress could not accomplish while both houses were under Democrat control. Now, unless the lame ducks get their tails in gear and pass a six year $500 billion reauthorization before Republicans take over in the House, it seems unlikely that anything good will come out of the next Congress for the construction industry.

Other construction related legislation likely to languish under Republican House leadership includes the Clean Energy and Security Act – also known as cap and trade, a public option for health insurance, the DREAM comprehensive immigration reform bill, and two bills designed to redirect unused TARP funds to infrastructure building: the Jobs for Main Street Act and the Small Business and Infrastructure Jobs Act. Any second infusion of federal stimulus dollars into the construction industry seems completely imaginary now.

Low Carbon Energy Technologies In Peril

2010-11-03T18:38:00.000-07:00

New Chinese restrictions on export of rare earth metals threatens the development of low carbon energy technologies to commercial scale in the United States, according to Senator Edward Markey of Massachusetts, who is asking for the Obama administration to take action against the proposed 30% reduction in Chinese rare earth export limits. China is the largest supplier of the exotic metal elements used in solar cell power generation technology, as well as in computer chips for commercial and defense applications.

FTC Issues New Green Marketing Rules

2010-11-03T18:36:00.000-07:00

Cracking down on misleading claims of environmental friendliness in marketing materials for numerous products and technologies, the Federal Trade Commission has issued new rules respecting the use of terms like “degradable” and “carbon offset” in advertising materials and on product packaging. Proponents of claims that products are “environmentally friendly” will be expected to produce competent and reliable scientific studies backing up their claims. Use of misleading certifications and seals of approval could subject advertisers to penalties. The guidelines discourage use of ambiguous phrases like “renewable materials” or “renewable energy” in favor of specific information about the materials and energy sources used in product manufacturing.

Nypro Bucking The Trend

2010-11-03T18:35:00.000-07:00

Nypro Incorporated is expected to seek trade subcontract bids for construction of an 80,000 square foot addition to its existing Asheville, North Carolina plastic molding facility, with construction to begin this December and to be completed next summer. The addition will create 156 new jobs once the production line is activated. Samet Corporation of Greensboro N.C. is the design/build contractor for the project. Nypro has 16,000 employees at plants in 15 countries, producing plastic moldings for Dell, Nokia, Procter & Gamble, and other customers.

Feds Moving Ahead With Women Owned Set Asides

2010-11-03T18:34:00.000-07:00

The SBA is implementing websites for self certification of women owned businesses, which could begin receiving federal government business in the first quarter of 2011, if they complete the certification process now. The set aside program will go into effect under new rules beginning February 4, 2011. Seminars are already being offered on implementation of the Women’s Contracting Rule.

India Orders From GE

2010-11-03T18:33:00.000-07:00

GE Energy has received a three quarter billion dollar order for steam powered generators as well as gas fired turbines to be delivered before March 2012. The equipment will be installed in $2.3 billion expansion of a Reliance Power plant in Andhra Pradesh.

Northeast Biodiesel Builds For The Future

2010-11-03T18:31:00.000-07:00

Looking ahead, and seeking a jump on its competitors, Northeast Biodiesel LLC of Greenfield, Massachusetts, has finished site preparation at its new waste grease biodiesel production plant in Greenfield, and is set to begin pouring the foundations for its 6,600 square foot plant. President Larry Union said, “I know we’re going against the grain right now, given the state of the industry without the producer tax credit.” The two phase project will install a 1.75 million gallon production train immediately, with an additional 1.75 million gallons of production capacity available when market conditions improve. Phase one should be complete by February 2011, and phase two by the end of 2012.

Congressional Gridlock Makes Congress Look Silly

2010-10-06T19:44:00.000-07:00

So far this congressional session, beginning in January 2009, the House of Representatives has passed 420 bills on which the Senate has failed to take any action one way or the other. The bills awaiting Senate action include many which would have salutary impact on the American economy, and some, like a bill requiring auditing of the $20 billion BP oil spill claim fund, which should be completely non-controversial. That’s one bill for nearly every Congressman which sits on a shelf awaiting action in the Senate. We should all be angry about this, and right now House members are angrier than most of us that their work is clogged up in Senate partisanship.

Wind Farm Nuisances

2010-10-06T19:42:00.000-07:00

The “clean, green” wind generated electrical power from rapidly rising wind farms across America has brought nuisance lawsuits in Illinois, Massachusetts, Pennsylvania, Texas and Wisconsin, contending that turbine noise and vibration from nearby windmills has driven down the value of neighboring residential property. Whether this is just another example of NIMBY, or whether it will become a growing problem for regulator responsible for locating wind power production facilities remains to be seen.

Overseas Cement Gambles

2010-10-06T19:41:00.000-07:00

Foreign cement manufacturers are staking hundreds of millions of dollars on investment in new cement production capacity, betting that construction activity will pick up rapidly in their corners of the globe. MerchantBridge of London and LaFarge SA of Paris invested $220 million in expansion of a cement factory in Karbala, Iraq, and MerchantBridge has obtained a license to construct a new two million ton per year cement factory less than ten miles away from the expanded Karbala facility. Iraqi government spokesman Ali al-Dabbagh predicts Iraq will invest $200 billion in infrastructure construction over the next four year period – hence the need for a dramatic increase in cement production capacity.

Meanwhile, Brazil’s Votorantim Cementos SA is investing $1.47 billion in construction of eight new cement making facilities in Brazil, bring Votorantim’s Brazilian capacity to 35 plants producing 42 million tons of cement per year. Votorantim also owns cement making plants in Bolivia, Canada, the United States and Chile.

Transportation Capital Funding – The Next Battleground

2010-10-05T07:24:00.000-07:00

America’s position in the global economy is rapidly being undermined by a rapidly deteriorating and drastically underfunded transportation system. Congress’ failure to act before the midterm elections on a long term reauthorization of the Federal Highway Trust Fund is just the main symptom of pain in this sector. A report released yesterday contains warnings by bipartisan transport experts that unless
Congress and the public quickly get behind innovative transportation reforms, America’s global economic leadership will fade in the near future.

Yesterday afternoon Transportation Secretary Ray LaHood announced federal grants totaling $776 million to 45 states plus the District of Columbia for bus system improvements, but much of that cash will go to purchase busses and other equipment, and very little of it to transportation infrastructure construction.

Meanwhile, several Republican gubernatorial candidates in hotly contested state election races are making campaign promises to block the Obama administration’s ambitious plans for bullet train service in the northeastern industrial corridor from Boston to Washington, D.C. The Stimulus legislation committed billions to high speed rail construction proposals touted as “shovel ready,” but so far the shovels have not turned a single scoop of railroad ballast onto high speed rail construction projects anywhere in the nation. If economic recovery is depending on the construction industry to bring job growth, these gubernatorial campaign issues are an ill wind blowing the wrong direction.

Small Business Lending Restricted By Market Forces

2010-10-05T06:43:00.000-07:00

Average people and many small businesses needing working capital are finding their usual lenders have no money to lend them, severely crippling job growth in this slowly recovering economy. Why? Because the megacorporations who really don’t need to borrow are in fact borrowing and hoarding huge sums merely because they are able to issue debt at amazingly low interest rates. While Microsoft and other huge borrowers are placing huge bond issues at interest rates so low any of us would gladly have them instead of our current historically low home mortgage interest rates, these companies are not investing the borrowed funds in new, factories, equipment or payroll expansion. Instead, they are hoarding the cash until the economy improves, effectively drying up sources of working capital for the smaller business which would love to hire and grow of only they had working capital to fund their expansion.

June Jobs Crash

2010-07-02T15:37:00.000-07:00

Despite President Obama's insistence that the economy is still "headed in the right direction," the June jobs report shows the addition of 83,000 private sector jobs was more than offset by loss of 225,000 temporary Census jobs, for a June net loss of 125,000 jobs from the economy.

HHS May Renege On Coverage For Preexisting Conditions

2010-07-02T15:36:00.000-07:00

Jay Angoff, HHS director of Consumer Information and Insurance Oversight, acknowledges that the interim high risk pools created to cover people with preexisting conditions between now and 2014, when health insurers are forced to cover them, may well run out of cash and be forced to turn the sickest people away before private market insurance is available to them. Applications for insurance from the pools, funded by $ 5 billion in federal cash, opened July 1. Richard Popper, Angoff's deputy director, acknowledges at the same time that proposed plan premiums of $ 140 to $ 900 per month may also serve to exclude a lot of people with preexisting conditions from these plans.

Balancing Federal Budgets On The Backs Of The Jobless

2010-07-01T21:59:00.000-07:00

Three times in the last three weeks the U. S. Senate has filibustered legislation which would extend unemployment benefits for those who have been out of work for more than six months. Ben Nelson of Nebraska was the only Democrat to vote against cloture on the bill. A total of 1.7 million jobless folks will see their benefits run out by Independence Day. The bill would have extended the unemployment benefit period from 26 weeks to 99 weeks.

Home Sales Not Leading Any Recovery

2010-07-01T21:58:00.000-07:00

One in three home sales during the first quarter of 2010 was a foreclosure. There were 1.2 million foreclosure sales in 2009, a four year increase of 2,500%.

Obamacare Fallout Starts

2010-07-01T21:57:00.000-07:00

Anthem Blue Cross in California, the first major health insurer to come to grips with Obamacare, is proposing 20% rate hikes.

State Budgets Spiral Downward

2010-07-01T21:56:00.000-07:00

Fifty states with a total of $89 billion in state budget deficits mean cuts this fiscal year of as many as 900,000 government employee jobs and jobs at companies doing business with state and local governments. Even with Obama's wished for $50 billion federal aid to state and local governments, which now appears doomed to nearly certain failure in Congress, state and local governments, and the businesses depending on them for survival, would lose nearly 395,000 government and private sector jobs in the last half of 2010 and the first half of 2011. State governments already cut 200,000 jobs in 2009 and the first half of 2010.

Employment losses have already meant drastic cuts in state and local tax revenues. In Illinois some sate government bills 8 months old still go unpaid, according to Illinois Comptroller's office spokesman Alan Henry. More layoffs will mean more revenue losses, and the downward spiral in state and local government employment and services will continue unabated for years to come.

Highway Trust Fund Reauthorization – No Time Soon

2010-05-28T19:41:00.000-07:00

Despite pressure from influential state and local officials like California Governor Arnold Schwarzenegger and Pennsylvania Governor Ed Rendell, and New York City Mayor Michael Bloomberg, as well as influential lobbies like the Amalgamated Transit Union and the Transport Workers Union of America, Transportation Secretary Ray LaHood predicts there won’t be any action on a full six year reauthorization of the Federal Highway Trust Fund until after the November 2010 midterm elections. Blue Dog Democrat Congressmen and other House fiscal conservatives don’t want to be pushed into voting this session for the tax increases which will be needed to fully fund a $500 billion, six year reauthorization.

As a result, Connecticut Senator Chris Dodd is pushing legislation to create a $2 billion emergency fund to subsidize state and local transit operations until a new Highway Trust Fund bill can be enacted. Without such a measure, local transit agencies all around the country will be facing route and schedule cutbacks and employee layoffs before a new House can be elected in November.

Blue Dogs Cut House Extender Package – Senate Delays Action

2010-05-28T19:40:00.000-07:00

With authorization for longer unemployment benefits and COBRA subsidies expiring after Memorial Day, the House passed a cut back version of the extender legislation this week, but the Senate adjourned without taking any action, once leaving out of work Americans whose benefits expire in limbo until Congress reconvenes June 7. Fiscally conservative House “Blue Dog” Democrats cut $33 billion from the proposed legislation before it passed, and separated out $23 billion in Medicare doctor reimbursement extensions for consideration apart from unemployment benefits. Both House measures now extend doctor pay and unemployment compensation only through November 2010 rather than through June 2011 as originally proposed.

As passed by the House, the bills will still increase the federal budget deficit by $50 billion, and the Senate threatens to reinstate the June 2011 cutoff date when it reconvenes June 7. The House measure also includes $6 billion for federal bond issues to support local and state infrastructure construction projects.

Of course, all these Senators and Congressmen are getting their regular paychecks while they keep out of work Americans waiting two or three more weeks for their next benefit payments.

Extenders In Jeopardy

2010-05-26T23:24:00.000-07:00

Leaders in both the House and the Senate are threatening to keep their bodies in session through the Memorial Day recess, in spite of members desire to travel home to their respective districts now for holiday parades and rallies. Nevertheless, it looks like the proposed legislation extending unemployment and COBRA benefits, along with Bush era tax breaks for individuals and small businesses, and Medicare payment levels for physicians, is doomed. Neither House nor Senate leaders have the votes to pass the proposed extenders through year end, because of the cost to the federal government. While the House could probably pass a three month extension, even that short relief appears to fall flat in the Senate, leaving those still looking for work whose benefits have already run out, or will run out soon, with little hope of further relief.

Senators and Congressmen who face tough reelection battles have added a number of revenue raising measures to the extender proposal, including an increase in oil excise taxes from eight cents to 32 cents per barrel, limits on corporate use of foreign tax credits, and a 157% increase in the tax rate venture capitalists pay on “carried interest” earnings. Business lobby protests over these tax increases could scuttle the entire benefits extension package. In addition to extension of benefits for the jobless, the bill also includes $24 billion in assistance to state governments with serious budget deficits, $6 billion to fund summer job programs for young people, and $65 billion to postpone pay cuts for doctors treating Medicare patients.

Fiscal discipline went out the window when the Obama administration wanted to stimulate the economy and pay for nearly universal health care benefits, but now that midterm elections are approaching it seems like Congress is completely willing to try balancing the federal budget on the backs of those who have still been left behind by the effects of the stimulus measures.

Health Care “Reform” Becoming Health Care “Conform”

2010-05-26T23:22:00.000-07:00

When stumping for his federal health care legislative package, President Obama repeated over and over at every rally and speech to Congress that “if you like your existing health coverage, you can keep it” under the bill which he signed into law this spring. As the Department of Health and Human Services begins writing the rules and regulations that will carry the provisions of the new law into effect, it is becoming clear that Obama’s promise was just a technicality on the road to limiting everyone’s health coverage to what the federal government wants you to have.

The proposed regulations will provide a penalty of $3,000 per year per employee against any employer whose health plan costs any of its employees more than 9.5% of their earnings. Of course, this penalty will eventually push all employers into offering only the health coverage the federal government wants you to have. Furthermore, there is no guarantee whatsoever that federal bureaucrats won’t reduce the 9.5% figure even lower in the future, in the name of “affordability” of health insurance. Because most Americans get health coverage through their employment, this provision of the new law puts the federal bureaucracy at HHS firmly in charge of what form of health insurance will be available to the vast majority of the population.

Yes, you can keep your current health plan, but only for a little while. Eventually, fewer and fewer employers will be offering health coverage costing more than 9.5% of the pay of the lowest employee on the totem pole, and rapidly declining demand for more comprehensive health coverage will drive insurers which might offer better coverage out of the market. Before long, we will all be on something that looks a lot like Medicaid, regardless of how much we would be willing to pay for better health insurance.

Pricing Cuts Promote Commercial Scale Solar Power Development

2010-05-26T23:20:00.000-07:00

According to panelists at the 12th Annual Electric Power Conference and Exhibition in Baltimore this week, decreasing material and construction costs of commercial scale photovoltaic power plants [PV] and thermoelectric solar power production facilities [CSP/CST] are promoting commercial scale solar power production developments in climates where sunlight is available most of the year to “fuel” such facilities. Leo Casey, Vice President and Chief Technical Officer of Satcom Technology Corp. in Boston told attendees that utility scale installation cost for PV facilities has dropped from $5 per watt to $4 per watt already, and he expects future pricing cuts down to the level of $1 per watt for solar panels and $1.50 per watt for construction cost, or a total of as little as $2.50 per watt of installed capacity. According to William Bettenberg of Applied Materials, Inc., more and more utility companies are embracing PV technology, with 485 megawatts of PV generating capacity installed last year.

Bob McDonald of Skyline Solar, Inc., echoed the same theme regarding CSP/CST solar power production facilities. McDonald cited both reduced module cost and improved installation expense as contributing to an improved position for commercial scale solar thermal power generation, particularly since the stored heat involved in the CSP/T process makes such production facilities especially useful as load following power generation facilities, rapidly becoming less expensive to build than other types of “peaker” generating units.

Financial Market Reform Legislation Moves Ahead

2010-05-23T18:20:00.000-07:00

With Senate passage of a second version of the financial markets regulatory legislation last week comes a prediction by Congressman Barney Frank that the conference committee will have a final markup very soon, and Congress will have a bill on President Obama’s oval office desk by Independence Day. If you are in the business of building houses and condominiums, it won’t matter which version of this bill comes out of conference committee, the legislation will put another brick on financing for your business. New rules on consumer lending will make it harder for home buyers to get mortgage loans, and this will keep the housing market in the doldrums for both new and existing homes and condos. New working capital for home builders is going to remain difficult to find because of this legislation.

Frank and his Senate counterpart Christopher Dodd have yet to release a timetable for conference committee action on the bills. The principal difference between House and Senate version of the measure is the Senate requirement that banks spin off their financial derivatives business into separately capitalized business units. Lobbying activity respecting this legislation will surely intensify in the coming weeks. So far in the 2009 and the first quarter of 2010 business and consumer groups have spent $1.33 billion in lobbying efforts regarding this bill, with 3,000 lobbyists contacting our 100 Senators and 435 Representatives, making a ratio of more than five and a half lobbyists for every politician in Congress.

Will Power Plant Carbon Capture Costs Prove Prohibitive?

2010-05-23T18:19:00.000-07:00

Carbon capture technology for coal fired power plants has been one of the darlings of Congressional committees working on climate change bills during the last year and a half, but panelist comments from industry leaders at the 12th Annual Electric Power Conference and Exhibition suggest that two aspects of carbon capture – cost and facility location – could toss a monkey wrench into the grand legislative plans surrounding this approach to greenhouse gas emission control. A representative of AES Corporation told the conference last week that under cap and trade the carbon dioxide allowances for coal fired electricity cost about $2 per ton. On the other hand, construction of a carbon capture facility adds $37 per ton to the cost of coal fired power, and transportation of CO2 to a storage site could add another$13 per ton, for total carbon capture cost of up to $50 per ton.

Just as the issue of nuclear power spent fuel rod disposal generated the acronym NIMBY, for Not In My Back Yard, conference attendees were busy discussing the new acronyms already in use regarding opponents of carbon capture facility site construction: NUMBY for Not Under My Back Yard; NOPE for Not On Planet Earth; and the new pejorative acronym for environmental activists opposed to carbon burial sites – BANANA, for Build Absolutely Nothing Anywhere Near Anyone. At least the debate is enriching Washington’s alphabet soup.

CAFÉ Standards For Big Rigs May Hit Construction In 2014

2010-05-23T18:17:00.000-07:00

President Obama announced last week that USEPA is going to expand the motor vehicle emission standards to include large trucks, including 18 wheel dump trucks widely in use by construction businesses. After they go into effect in 2014, the truck standards will undoubtedly result in significant price increases for new dump trucks you are planning to add to your fleet. The construction industry, so recently prized as the engine of economic stimulus legislation, is taking yet another 2x4 to the back of the head on this one.

War Funding Bill May Include Renewable Power Loan Rider

2010-05-23T18:16:00.000-07:00

The $58.5 billion emergency military funding legislation for Iraq and Afghanistan now working its way through Congress might give a small boost to power plant construction in the form of $180 million in loans for nuclear plant construction and wind and solar power plant development. Speaker Pelosi is insisting that a nuclear loan program proposed for addition to the emergency funding bill give parity to wind and solar power development, with $90 million for nuclear construction loans and $90 million for wind and solar power development. If the package survives the legislative process, this funding could support as much as $9 billion in additional loan guarantees for nuclear power plant construction and $3 billion in loan guarantees for wind and solar power generating facility construction, including the $2 billion “borrowed” from earlier legislative proposals to fund extension of the “cash for clunkers” program in the economic stimulus package.

“Extenders” Delayed Another Week

2010-05-23T18:14:00.000-07:00

Despite the pain and agony additional delay is inflicting on every American citizen out of work and looking for it, Congress has delayed action for an additional week on legislation extending unemployment benefits for folks whose checks ran out weeks or months ago. The “extenders” of unemployment and COBRA benefits, Bush era tax breaks for individuals and small businesses, and other essentials for the survival of the economically disadvantaged, was supposed to be put to a vote last week. Neither house of Congress is prepared to act, in spite of the fact that the last temporary extension of these provisions expires over the Memorial Day weekend.

Federal Highway Trust Fund Reauthorization Stalled

2010-05-19T07:33:00.000-07:00

There has been no significant legislative action to move forward the stalled reauthorization of the Federal Highway Trust Fund since House Transportation and Infrastructure Chairman James Oberstar’s hearing over a month ago on innovative financing methods for surface transportation infrastructure construction. Everyone in Congress recognizes that motor fuel taxes will be woefully inadequate to fund a six year $500 billion reauthorization measure, yet, in an election year, no one wants to sponsor new revenue measures to bridge the funding gap. Consequently, we can look forward to continuation of the series of three and six month interim funding measures for federal surface transportation projects, and the resulting inability of state and local government officials to make any long term plans or budgets for transportation infrastructure construction projects.

While the construction industry segment of the struggling American economy continues to languish behind the pace of nascent recovery, you would think our legislators in the nation’s capitol would take some interest in legislation with a very good chance of picking up the pace of job creation in construction, but you would be mistaken.

American Company Leads In Wind Power Operations

2010-05-19T07:31:00.000-07:00

With 23 years of experience as a third party operator of wind power generation facilities, NAES Corporation of Issaquah, Washington, right here in the United States, is the world’s largest third party operator of wind energy generation facilities. NAES manages and operates 43 billion watts of wind energy facilities at 122 operating plants.

With 375 additional gigawatts of wind energy under development worldwide, NAES is a leader in power production even before passage of any American federal legislation promoting renewable energy growth and development. Hats off to one example of American technological ingenuity continuing to progress in spite of Congressional indifference.

Power Industry Lobbying Efforts Support Senate Climate Bill

2010-05-19T07:04:00.000-07:00

Electrical generation industry leaders at the twelfth annual Electric Power Conference executive forum in Baltimore yesterday rallied behind the Kerry/Lieberman American Power Act, the Senate’s alternative to the Waxman/Markey cap and trade bill passed last year by the House. Urging his colleagues to get behind passage of the Kerry/Lieberman legislation, James Connaughton, Executive Vice President of Constellation Energy Group, told the assembled power industry executives: “In Washington, difficult legislation is often declared dead – right before it is passed.”

Lamenting that heavy handed USEPA regulation of carbon dioxide emissions is the likely alternative should Congress fail to pass any climate change bill this session, Connaughton told the power industry leaders that in his experience USEPA rules usually accomplish about a quarter of their goals at four times the estimated cost to industry.

During the executive round table on climate change legislation, Connaughton’s sentiments in support of the Kerry/Lieberman bill were echoed by Keith Trent of Duke Energy.

Congressional Health Care Secrecy Betrays Public Trust

2010-01-06T10:28:00.000-08:00

In a continuing program of concealing debate and compromises on the pending health care reform legislation from the public view, Democratic leaders in both houses of Congress have agreed to bypass the formal conference committee process for reconciliation of the differences between the House and Senate bills, and instead intend to draft compromise provisions behind closed doors before the House reconvenes later this month, have the House pass the agreed compromise provisions as an amendment to the House bill, and then send the amended House bill to the Senate for a final vote in which 60 affirmative Senate votes would result in passage of an identical version to send to the Oval Office for signature before President Obama’s State of the Union address to a joint session of Congress.

By these measures, Congress would avoid public observation of the process through C-Span broadcasts of conference committee hearings and debates, and issuance of a published conference report before either house votes on the bill. This alternative to the customary procedures also insures that most Senators and Congressmen, like the rest of the citizenry, will be ignorant of the details of the 2,074 pages of the legislation they are voting on.

The House amendment will have to resolve conflicts respecting the inclusion of a “public option” in the legislation, threshold levels of premium cost for imposing a 40% tax on “Cadillac” health insurance plans, the Senate’s favored funding mechanism for the bill, and the minimum level of income before imposition of a wealth surtax, the funding mechanism favored by the House bill. Congressional leaders expect the final compromise measure to include aspects of both funding mechanisms, thereby reducing the number of taxpayers affected by either type of revenue increase.

Democrats are feeling more intense pressure to get this legislation to the president’s desk before midterm elections, as announced and expected Senate and Congressional retirements open more and more seats in both houses to Republican challengers. The Congressional Budget Office predicts that the final bill will leave between 18 million and 23 million citizens still without health insurance coverage. As of yesterday, it appeared House leaders were unwilling to press forward their version of a nationwide public option in the final legislation, since Sensate passage of such a provision appears nearly impossible.

Senate Majority Leader Harry Reid’s secretive approach to the manager’s amendment, which became the final Senate version of this bill, illustrates the sort of provisions which can creep into legislation at the last minute, leaving the public and most legislators unaware of the details of bills passed in this secretive way. While the Senate bill does not require all employers to provide workers with health insurance, it does impose a $750 per employee annual penalty on every business with over 50 employees if the business does not provide health coverage, and any one of its employees receives a federal subsidy to pay his or her individual or family health insurance premium. At the last second urging of Oregon Senator Jeff Merkley, Reid secretly accepted an amendment to the Senate bill applicable only to the construction industry, reducing the size of penalty exempt employers from 50 employees to 5 employees.

Labor unions argue the Merkley amendment is needed to avoid giving non-union contractors an unfair competitive advantage in an industry where 90% of businesses have fewer than 20 employees, and union health care costs can represent 12.5% to 20% of payroll costs. Labor’s health insurance costs are expected to increase dramatically under this legislation, by as much as $1,000 per employee per year, due to the bill’s elimination of annual and lifetime benefit limitations, preexisting condition exclusions, and extension of family coverage to children of the employee until age 26.

On the other hand, smaller contractors argue that imposition of payroll cost increases amounting to as much as 25% will require layoffs at a minimum across the home building sector, or at worst, drive many of them out of business altogether. Whether the Merkley amendment stays in the final, secretly compiled bill, remains to be seen. The ongoing closed door drafting of this legislation, which will affect each and every American one way or another, acquiesced in by Speaker Pelosi and President Obama who campaigned on pledges of greater transparency and openness in government, leaves too much room for many similar last minute special interest provisions to creep into the bill, sight unseen.

Health Care Reform Staggers Toward The Finish

2009-12-16T12:36:00.000-08:00

If, as President Obama predicts, health care reform legislation is approaching the finish line in the Senate, then it has been staggering fitfully across the last stretch of the track. Senators are supposed to vote on this 2,000 plus page bill before Christmas, yet none of them have yet seen the actual text of the legislation. Managers of the bill will not release the final version until CBO has completed its scoring of the measure, and of course CBO is shooting at a moving target as the compromise negotiations stutter along on the two most controversial and stubbornly difficult aspects of reform: abortion funding and the public option.

Senator Joe Lieberman says he won’t vote for a bill with a public option in it, and Senator Roland Burris says he won’t vote for a bill without a public option in it. Either way, Democrats come up one vote short of the 60 needed for passage. No matter what the resolution of the public option problem, abortion coverage is an independent and equally contentious hurdle. Women’s rights advocates insist every American woman should have an avenue to purchase health coverage including the possibility of abortion services, and right to life advocates are equally insistent that not a penny of federal taxpayer dollars should go to fund the purchase of abortion insurance, either through premium subsidies or Medicare and Medicaid coverage.

Of course, passage in the Senate, whether before or after Christmas, does not assure that health care reform becomes reality. The only thing now clear about the Senate version of the legislation is that it won’t be identical to the bill already passed by the House. That means that whatever the Senate does pass will go to a conference committee, where these two seemingly impossible issues will rise again, along with the differences in approach between House and Senate tax impositions to pay for the enormous cost of expanding health coverage for those who can’t or won’t buy it on their own. Super Bowl Sunday may come and go before American citizens know what conclusion Congress reaches regarding health care reform legislation.

Obama’s New Jobs Initiative

2009-12-16T12:34:00.000-08:00

The Obama administration and House Democrats are pushing forward a second jobs initiative this week, though prospects for Senate consideration of the measure before year end are grim. The proposal will redirect $75 billion from unspent TARP appropriations to job creation programs and extensions of emergency assistance for those now out of work. The measure is expected to ultimately include $35 billion for highway and transit construction, $2 billion for water construction projects and affordable housing construction, and about $11 billion for school construction and renovation. Additional appropriations will include $23 billion for teaching jobs, and $6 billion for other job programs including local law enforcement, summer jobs for youth, and college work/study programs and AmeriCorps job training.

Conspicuously absent from the House measure are two programs President Obama has promoted as creating “green” jobs: so called “cash for caulkers” incentives for home and business weatherization efforts, and tax incentives for small business new hiring.

Emergency relief measures in the House bill will include $79 billion to provide a six month extension of unemployment benefits, COBRA subsidies, and other “safety net” programs for the jobless. In the expectation that Senate action on the House bill will not happen until next year, the House is at the same time including a two month unemployment and COBRA benefits extension in the Defense appropriations bill, attempting to avoid the break in benefits jobless folks experienced last time Congress stalled action on unemployment extension legislation.

The White House is also proposing a $5 billion addition to tax credits for renewable energy products, in an effort to spur hiring in the manufacturing of such things as wind turbines, solar panels and electric cars. Knowing that the $2.3 billion in the stimulus package for such projects was oversubscribed suggests that users of such new incentives are ready to move at a moment’s notice.

Speaking at a Home Depot store in Alexandria, Virginia yesterday, Obama highlighted the home weatherization programs as part of the administration’s efforts to assist the construction industry, where unemployment has reached 21%. His remarks, however, glossed over the fact that the $5.5 billion appropriated in the stimulus package for energy retrofits of federal government buildings has been painfully slow to percolate out into the economy. GSA so far has allocated only $1.5 billion of the $2 billion appropriated for use in 2009. The agency is racing to allocate the remaining half billion dollars in the final two weeks of this year. Furthermore, of the $2 billion to be allocated, only $89 million, or less than 4.5%, has actually been paid out to contractors.

Reports from contractors in this sector indicate that government projects are replacing only 15% to 30% of the private sector business lost due to the crash of the economy.

New Climate Bill At Odds With Copenhagen Developments

2009-12-16T12:32:00.000-08:00

The only really useful document coming out of the U N climate change negotiations in Copenhagen this week is a draft of the REDD draft, Reducing Emissions From Deforestation and Forest Degradation, which will be delivered today to leaders of the 200 or so nations participating in the discussions. This draft document sets up a program for paying developing nations for conserving natural assets which reduce accumulations of carbon dioxide in the atmosphere. The payments are to be funded by industries in developed nations who contribute by purchasing offsets for their carbon emissions into the atmosphere. One top U N official, when asked about the status of talks on other issues, gave a disheartening one word response: “Terrible.” U N Secretary General Ban Ki-moon, speaking of the plan to defer conclusion of a treaty to replace the Kyoto Protocol for another year, said “We do not have another year to deliberate. Nature does not negotiate.”

Meanwhile, back in Washington, Senators Maria Cantwell and Susan Collins have introduced an alternative to the climate change legislation passed earlier by the House, called CLEAR, for Carbon Limits and Energy for America’s Renewal. Directly contrary to the policy emerging in Copenhagen, CLEAR would prohibit American industries from purchasing carbon emission credits based on offsets, such as reforestation or forest conservation in other countries. Under CLEAR, the only trading in emission credits would be permitted among fuel producers, excluding both speculators and energy users from trading in carbon emission credits. The Cantwell/Collins bill would not allow large energy consumers from trading emissions credits as a hedge against rising fuel and power prices. Why is it that some elements in the United States Senate seem to be two steps behind the rest of the world when it comes to twenty first century energy policy?

Gutierrez Introduces Immigration Bill

2009-12-16T12:31:00.000-08:00

Illinois Congressman Luis Gutierrez yesterday introduced the Hispanic Caucus version of immigration reform legislation in the House, characterizing the bill he sponsors with nearly 90 other Congressmen as “pro-family, pro-job and pro-security.” The Gutierrez bill would immediately give “nonimmigrant status” to 12 million illegal aliens upon registration with the federal government, payment of a $500 fine, plus application fees, and clearing a criminal and security background check.

After six years, or clearance of the existing backlog of green card applications, whichever comes first, the “nonimmigrants” could apply for lawful permanent resident status. The bill also repeals the 287(g) permission for state and local police enforcement of immigration laws.

While the bill calls for establishment of a permanent system for verifying a person’s work eligibility, it does not specify whether or not the existing E-verify system would be made permanent. Republican Congressmen oppose the bill. House Judiciary ranking member Lamar Smith said “Allowing millions of illegal immigrants to stay and take away jobs from citizens and legal immigrants is like giving a burglar a key to the house.”

Business groups oppose the legislation’s creation of a 100,000 visa random lottery rather than a guest worker program keyed to the unmet employment needs of the American economy.

Lobbyists Drafting Climate Change Treaty

2009-12-04T14:26:00.000-08:00

International treaties are a lot like Congressional legislation: if you want a preview of what will be in them, you need to get to be close friends with a lobbyist. The lead lobbying organization at the Copenhagen climate change talks starting next week will be the Climate Action Network, an amalgam of 450 environmental, business and scientific groups worldwide. CAN is already circulating a proposed draft of the new treaty to replace the Kyoto Protocol among delegates and hangers on at the Copenhagen conference.

The CAN draft treaty comes complete with all the required legal language to embody international commitments on greenhouse gas reductions, economic wealth transfers to pay for the costs of environmental controls in developing nations, and a framework for a global cap and trade system of emissions futures. Of course, blanks in the draft exist where diplomats and other government functionaries from participating nations can fill in numbers representing each country’s emission and financial commitments, but except for some minor tweaking to satisfy this or that nation’s particular wants or needs, no government leader or group of leaders from the 192 participating nations needs to bother his or her staff with the details of drafting such an important international treaty – the draft already exists, and the tweaking will be mostly handled by lobbyist cell phone conversations, E-mails and twitter tweets from hallway to hotel room during the conference.

Anyone with a blackberry, a laptop and the price of air fare to Denmark can seek to participate in the real, though informal, corridor conversations which will finalize the details of the next climate change treaty, but only those folks who have already worked at establishing trust and confidence from world leaders is likely to have significant input. If you can stand the Danish winter weather, though, and you have a subscription to twitter, it would really be fun to eavesdrop on the conversations.

Secret Health Care Reform Deals Building Up In Managers’ Amendment

2009-12-04T14:23:00.000-08:00

While the Senate floor debate on the health care reform legislation continues along predictable partisan lines, with speeches concerning dramatic reductions in grandma’s Medicare benefits and the evils of federally funded abortion coverage, the real version of the Senate bill continues to be formed deal by deal in secret in Majority Leader Harry Reid’s Senate office just across the corridor from the stately Senate Chamber in the nation’s Capitol. Reid meets privately, one on one, with Democrat Senators, asking them what they need in the managers’ amendment he will present right before the final floor vote.

Managers of legislation in the Senate have the right to accept suggested amendments to the text of legislation which has been published to members and made available to the public, and to make those changes in the bill under debate right up until the voting begins. So, neither fellow Senators nor average citizens really know what the Senate is voting on until the last second. Reid isn’t telling anyone other than the particular Senator requesting a special provision in the managers’ amendment what he is promising, and no one at all but Reid knows what the aggregate text of the managers’ amendment looks like as time marches on.

We do know that Senator Ben Nelson of Nebraska will be proposing a floor vote on his amendment which would prohibit abortion coverage altogether for anyone buying insurance from the public option and anyone who receives a federal premium subsidy. Nelson’s proposal is even more restrictive than the Stupak amendment in the House legislation.

Meanwhile, Republican amendment proposals include everything from their pet limitations on medical malpractice non-economic damages to a $400,000 ceiling on salaries of health insurance company executives.

Mercer Consulting released results of a survey shows 70% of the businesses say they will cut the health benefits available to its employees rather than pay the proposed tax on Cadillac health insurance coverage. So much for President Obama’s promise that “if you are happy with your present health insurance, you can keep it.” Sixty-three percent of businesses responding to the survey said they would cut back benefits rather than pay the tax, and another 7% said they would terminate their health plans altogether. Only 16% of those who would cut benefits said they would return any of the savings to employees in the form of higher pay. If these numbers play out, health care reform will have a negative effect on about 89% of Cadillac plan participants, most of whom are trade union members.

Thursday the Senate rejected, by a vote of 58-42, a Republican amendment to the health care bill which would have restored the $500 billion in Medicare cuts the Democrats are using to “pay for” the enormous cost of the health care reform legislation.

Estate Tax Extension Faces Suffocation In The Senate

2009-12-04T14:21:00.000-08:00

Thursday’s House vote of 225-200 in favor of permanently extending the estate tax at a rate of 45% on individual estates over $3.5 million and family estates over $7 million is no guarantee that the Senate will even take up the bill before the estate expires January 1, 2010. Senate Minority Whip Jon Kyl says Democratic Congressmen and Senators will be in for a rude shock when the estate tax revenue disappears in a puff of smoke New Years Day. Republicans universally oppose extending the tax, and enough Democrats crossed the aisle to vote against the extension in the House to suggest that mustering 60 Senate votes to continue making death a taxable event could be a real challenge for Senate leadership.

Jobs Data Points To Stabilization

2009-12-04T14:18:00.000-08:00

Council of Economic Advisers Chair Christina Romer released a statement today commenting on the 0.2% drop in nationwide unemployment in which she characterized employment gains in temporary help services as hopeful for the future of the American economy. “It is important not to read too much into any one monthly report, positive or negative,” Romer said. “Bit, it is clear we are moving in the right direction.”

Yesterday, President Obama hosted a conference of 130 business and labor leaders at the White House to discuss job creation measures the federal government might undertake in the next month or two to keep the employment trend moving in a favorable direction. Stressing the unprecedented federal deficits and the strain they produce on the national economy, Obama pointed out that Washington presently lacks sufficient resources to fund direct government job creation legislation. “Ultimately, true economic recovery is only going to come from the private sector,” Obama told the assembled business and labor leaders and academic economists. “We have to face the fact that our resources are limited.” Obama is expected to detail forthcoming legislation to spur job creation and extend jobless relief for the unemployed in a speech next Tuesday morning at the Brookings Institution.

Expectations are that Speaker Pelosi and her Congressional colleagues will soon introduce legislation funding job creation programs with the $150 billion left over in the Troubled Asset Relief Program, despite Treasury Secretary Geithner’s preference to use the cash to pay down the national debt. Rhode Island Senator Jack Reed today proposed additional federal borrowings of as much as $100 billion to pay for one year of extended unemployment benefits and COBRA health care subsidies for those Americans still out of work. Reed may seek to attach his legislation to the forthcoming omnibus appropriations bill. About a million unemployed Americans will exhaust their benefits in January, and by March 2010 that number could rise as high as 3 million.

Additional proposals could include wage subsidies or tax benefits for hiring new workers.

Climate Change Advocates Move Slowly, Embracing Nuclear Power

2009-11-24T11:42:00.000-08:00

Now that world leaders have acknowledged the impossibility of coming to any binding agreement at next month’s Copenhagen conference, Senate action on climate change legislation has lost its urgency for the time being. The Obama administration, however, still wants a comprehensive cap and trade measure, like the House bill passed earlier this year, rather than a more limited measure targeted at the electric power production industry, as some legislators have been heard to suggest.

White House climate adviser Carol Browner said last week that incremental greenhouse gas emission reduction measures are not in the cards. “We need comprehensive energy reform,” she said, including power plants, refineries, factors, farms and other sources of carbon emissions. She said she expects negotiation of an international climate treaty to replace the Kyoto Protocol will take up to a year after the Copenhagen conference.

Meanwhile, former Greenpeace commando Stephen Tindale, who once broke into a nuclear power facility to scrawl “Danger” on the side of the reactor building, acknowledges that significant greenhouse gas emission reduction in future years will depend upon construction of a large number of nuclear generating plants around the world. “It’s really a question about the greater evil – nuclear waste or climate change. But there is no contest any more. Climate change is the bigger threat, and nuclear is part of the answer,” Tindale says. “Like many of us, I began to slowly realize we don’t have the luxury any more of excluding nuclear energy. We need all the help we can get.”

Jobs Bill, Maybe, Wall Street Transaction Tax, Maybe Not

2009-11-24T11:41:00.000-08:00

House Speaker Nancy Pelosi scoffs at the idea floated last week by some of her Democratic colleagues that new job creation legislation could be funded by a tax on stock, bond and futures transactions on Wall Street financial markets, and Obama administration officials are equally cool to the idea, though some executive branch officials have spoken favorably in recent days about the desirability of “targeted” proposals for quick new laws to boost American employment. Oregon Congressman Peter DeFazio and New York Congressman Michael Arcuri are circulating a proposal for a financial transaction tax to raise $150 billion every year. Pelosi says such a new tax could drive Wall Street jobs overseas. Treasury Secretary Timothy Geithner echoes that such a tax would be “inappropriate” for the United States.

Vice President Biden’s chief economic adviser Jared Bernstein says, though, that the administration is looking for new ways to make sure the economic recovery is not a jobless one. Bernstein’s suggestions include direct public works programs such as hiring the jobless to board up vacant buildings, help with child care, and paint school buildings.

Meanwhile, at a hearing last Thursday before the House Oversight and Government Reform Committee, Congressmen continue attacking the claim on Recovery.gov that the $787 billion stimulus package has created 640,000 jobs so far. GAO reported at the hearing that the web site was replete with “a range of significant reporting and quality issues,” including 60,000 jobs reported as created without any dollars being spent, and 9,000 reports of money spent with no jobs created. House Oversight and Government Reform Chairman Edolphus Towns said after hearing the GAO testimony, “It is clear that errors found by GAO and others should be corrected immediately, not months later, no matter how difficult.”

Finally, economists are beginning to challenge President Obama’s campaign emphasis on green job creation as a solution to continuing economic growth. Georgia State’s Economic Forecasting Center Director Rajeev Dhawan says green jobs are “not the spark. This is not the solution to the current big unemployment problem.” His sentiments are seconded by Manhattan Institute economist Max Schulz: “For all the talk about green job creation, there’s an unavoidable problem with renewable energy technologies and the policies that promote them: From an economic standpoint, they’re big losers. Renewables can’t produce the large volumes of useful, reliable energy that our economy needs at attractive prices. Government subsidizes renewable because – all things being equal – the free market won’t.”

A recent survey by the Transportation Construction Coalition is also putting a damper on the pet political theory that additional funding for road and bridge projects will be a job saving legislative measure. Despite injecting $27 billion into such projects through the stimulus package, more than a million construction sector jobs have been lost in the past 12 months. Furthermore, this month’s Coalition survey indicates that 44% of road and transit contractors expect to lay off more permanent employees this year, even though they have received stimulus supported contracts.

Recovery.gov Numbers Embarrass Obama’s Bureaucrats

2009-11-19T15:57:00.000-08:00

News reports of grievous mistakes in numbers reported for job creation on the stimulus web site Recovery.gov have been popping up ever since the first claims by the Obama administration that the stimulus appropriations have saved or created 640,000 jobs to date. Now the worst of all seems to be a report that stimulus spending of $761,420 in Arizona’s 15th Congressional District has created 30 jobs there. The problem? There is no 15th Congressional District in Arizona!

House Appropriations Chairman David Obey said it best: “The inaccuracies are outrageous, and the administration owes itself, the Congress, and every American a commitment to work night and day to correct the ludicrous mistakes. We designed the Recovery Act to be open and transparent. Whether the numbers are good news or bad news, I want honest numbers and I want them now.” In a surfeit of understatement, Vice President Biden acknowledged, “We know this is not 100% accurate. Further updates and corrections are going to be needed.”

Job Creation On The Agenda

2009-11-19T15:56:00.000-08:00

Quick action to stimulate employment and halt rising unemployment will be the next agenda item before Congress adjourns for Christmas. Leaders in both houses are already pressing for a compromise six month extension of the federal Highway Trust Fund at current levels, so the relevant committees can begin work immediately on a permanent six year reauthorization bill. Senate forces wanted an 18 month extension, while House Transportation and Infrastructure Chairman James Oberstar wants to finish the six year bill before Congress adjourns for the holidays. Senator Barbara Boxer, Chair of the Environment and Public Works Committee, has already accepted the six month extension strategy, and says a full six year reauthorization measure is her committee’s next priority.

Chairman Peter DeFazio of the House Highways and Transit Subcommittee, says that rising unemployment makes “infrastructure a front burner issue.” While Republican politicians say unemployment rates above ten percent show failure of the earlier stimulus legislation, House Majority Leader Steny Hoyer responds that Republicans consistently vote against economic growth bills. “Votes don’t lie. Republicans have consistently said ‘no’ to creating jobs and helping Americans during this recession,” Hoyer contends.

The renewed talk of job legislation is also bringing out lobbyists. The U. S. Conference of Mayors and the Associated General Contractors both press for transportation appropriations targeted at urban areas, where construction sector unemployment tops 18%. The Mayors are also encouraging votes in favor of increased block grants for energy efficiency and conservation, community development, and police services. Solar panel makers are lobbying for a new 30% tax credit for investments in equipment to make solar energy components, in addition to the grants already appropriated to support solar panel factory construction in California and wind turbine factory expansion in Idaho.

Proposals to fund all this job creation legislation include a new Wall Street financial transaction tax of 0.25% on stock trades, and 0.02% on commodity future trades. The annual expected revenue of $150 billion would go $75 billion for national debt reduction, $55 billion for miscellaneous job creation programs, and $20 billion for highway and other infrastructure construction. Retirement, education and health savings transactions would be exempted from the tax.

Another proposal being floated by Congressmen Barney Frank, Peter DeFazio and Earl Blumenauer is to dip into the $317 billion in as yet unspent TARP funds for infrastructure construction, assistance to homeowners facing foreclosure, and loans to small businesses. Any other unspent TARP cash or money repaid by financial institutions which got federal assistance, would go toward paying off the national debt. Unless legislators act on such measures before it adjourns December 18, Treasury Secretary Timothy Geithner is expected to notify Congress that he will extend the TARP program through October 2010.

Copenhagen Climate Change Summit Expectations Slashed

2009-11-18T09:05:00.000-08:00

The Obama administration is backpedaling rapidly on the eve of the Copenhagen conference for negotiating a replacement for the soon to expire Kyoto Protocol on greenhouse gas emission controls. Deputy National Security Adviser for Economic Affairs Michael Froman said Monday “It was unrealistic to expect a full, legally binding international agreement to be reached between now and when Copenhagen starts in 22 days.”

Congressional leaders acknowledge that climate change measures in the Senate have been bumped off the fast track by the extended health care reform debate and the need to focus on job creation and financial market reform before any detailed cap and trade emissions program can be put into place. UN Secretary General Ban Ki-moon expects the Copenhagen talks to result in little more than a political agreement to continue negotiations on the terms of a potential binding replacement treaty.

Senator Dick Lugar acknowledges that the present is an especially difficult time for US negotiators to enter into discussions about payments to developing nations to help them convert to clean technologies and cope with already occurring climate changes. “There’s the thought of transfer of wealth to so-called developing countries and billions of dollars in the midst of this [American unemployment at 10.2 %]. This is real money. All I’m saying is, get real,” Lugar pronounced. President Obama and other world leaders are now looking for a two step process, with Copenhagen representing the first step: a nonbinding political agreement calling for greenhouse gas reduction and aid to developing economies. Step two will be another meeting late next year to negotiate a binding treaty, presumably after Congress has committed the US to specific emission reduction goals.

Small And Family Business Tax Breaks In The Works

2009-11-18T09:04:00.000-08:00

Politicians believe small businesses are the job engine of the US economy, and besides direct job creating measures, legislative leaders are also proposing work on a couple tax breaks for family owned and other small businesses before this session of Congress comes to a close. Despite Obama administration resistance to a permanent fix for the estate tax this session, House Ways and Means Chairman Charles Rangel is still pushing for permanent changes in the estate tax.

On the Senate side, Senators Thomas Carper and George Voinovich have introduced a bill to index the estate tax exemption to inflation. Their measure carries a cost of $23 billion in lost revenue to the federal government. A different measure supported by Congressmen Shelly Berkley and Senator Blanche Lincoln, would lower the estate tax rate to 35% and raise the exemption to $5 million, costing a revenue loss of $70 billion altogether.

Carper and Voinovich tout their proposal as a compromise measure. “For the sake of families and small businesses, we can’t let the estate tax go back into full effect,” Carper says, “and yet as long as we are running huge budget deficits we can’t afford full repeal, either.”

In an effort to give a break to some businesses which entered unwittingly into discredited tax shelter investments, the House Ways and Means leadership and the Senate Finance leadership are proposing a measure to relieve small businesses from fines grossly disproportionate to the tax benefits they purported to receive with the barred tax shelters. Some businesses have been fined as much as $300,000.00 for claiming an improper tax benefit of $15,000.00. House Ways and Means Oversight Subcommittee Chairman John Lewis spoke about such situations: “This is not fair. Small businesses should not be run out of business by tax shelter penalties aimed at big corporations.”

Last June the IRS stopped collecting the disproportionate penalties, to give Congress an opportunity to correct the situation. A bill introduced in both houses of Congress Monday would limit the penalty to 75% of the tax benefits improperly claimed.

Jobs Are Job One

2009-11-18T09:02:00.000-08:00

House Majority leader Steny Hoyer said Tuesday that he and other House leaders are pushing for a December 18 floor vote on another job creation bill. He said the measure will focus on public sector jobs, job generating tax credits, infrastructure projects, and assistance to state governments. “Clearly, 10.2% unemployment is unacceptable and is causing great pain to literally millions of people around the country,” Hoyer stated.

Hoyer added that he believes the legislation ought to include another extension of unemployment benefits and health insurance premium assistance for those out of work.

On the Senate side, Majority Leader Harry Reid says his first priority after finishing health care reform legislation will be a jobs bill. Senate Democratic Policy Chairman Byron Dorgan echoes that sentiment. “With 10% unemployment, the first priority for our government is to focus on helping the private sector create new jobs,” Dorgan announced. Leaders in both houses are now considering the possibility that a six year Highway Trust Fund reauthorization measure could be designated a jobs bill and pushed through Congress on a faster track than anyone thought possible a few weeks ago.

Meanwhile, there are signs that the North American economy may be turning around. Since the beginning of this year, 6,080 new capital investment projects totaling $350.9 billion have begun in the U.S. and Canada. Another 3,633 capital projects, representing investment of $1.2 trillion, though delayed, are still expected to begin in a year or two. The discouraging factor is that 2,835 investment projects, representing $283 billion of investment, have been put on hold indefinitely or cancelled outright.

Highlights of economic investment are the light rail sector, with $17 billion of new construction begun this year, and semiconductor manufacturing, with $10 billion total investment in 2009.

Back To Square One On Climate Change

2009-11-06T17:40:00.000-08:00

Senator Barbara Boxer’s action in discharging the climate change bill from her Environment and Public Works Committee without and Republican committee members in attendance has angered so many leaders on both sides of the aisle in that chamber that three Senate leaders have determined to go back to the drawing boards and craft an entirely new measure for consideration, rather than continuing to advance the Kerry/Boxer bill reported out Thursday.

Democrat John Kerry, Republican Lindsey Graham and Independent Joe Lieberman are already working on Plan B, a bill to promote green job creation while protecting the coal and steel industries, expanding nuclear power production, authorizing more offshore oil drilling, and subsidizing renewable energy research and development.

The possibility that plan B will focus on job creation rather than reducing carbon emissions and fighting climate change has fractured the environmental interests into warring factions. One side of the fissure, including the Environmental Defense Fund, is already putting out ads featuring energy made in America, 1.7 million “green jobs,” and reduced dependence on foreign oil. The other side, including the World Wildlife Fund and the Center for Biological Diversity, excoriates what they see as dilution of the global warming alarm message in favor of soft soaping ads they call “climate-light.”

Meanwhile, with Senate leaders acknowledging that a floor vote in any sort of climate change bill in the Senate won’t likely happen this year, energy lobbyists are ramping up their spending, and representatives of African nations are walking out of negotiations in Barcelona preliminary to the UN conference on a replacement agreement for the Kyoto Protocol set for December in Copenhagen. It remains to be seen whether the Boxer maneuver is a complete barrier, or just a speed bump on the road to Congressional action later in the calendar.

Military Construction Appropriation Coming Soon To Your Senate Floor

2009-11-06T17:39:00.000-08:00

Senate Majority Leader Harry Reid said he hopes the Senate will pass the military construction appropriations bill early next week, in time for the Veterans’ Day holiday. The bill appropriates a total of $133.9 billion for military and veterans’ affairs, including a total of $23.2 billion for military construction projects not funded in the stimulus package.

Senators Rip Texas Wind Farm Use Of Chinese Made Turbines

2009-11-06T17:34:00.000-08:00

In a blinding flash of protectionism, New York Senator Charles Schumer has written a letter to Energy Secretary Steven Chu, asking Chu to block federal funding for development of a huge $1.5 billion Texas wind farm which will be build using turbines manufactured in China. The project is expected to create 330 jobs in Texas and 800 jobs in the Chinese factory which will build the turbines. “The purpose of the Recovery Act was to jump start the economy to create and save jobs – American jobs,” Schumer wrote. “American taxpayer dollars should not be used to finance those Chinese jobs.”

Walt Horniday, president of one of the U. S. partners in the project, responded, “This project will not take place without the planned benefits of the American Recovery and Reinvestment Act. Any characterization of this planned project as anything other than an economic development lifeline to the wind industry during tough economic times is just inaccurate.”

National Republican Senatorial Committee Chairman John Cornyn of Texas used the wind farm project as one example of a failure of Obama administration economic policies. “This just shows how ridiculous this whole stimulus proposal was,” Cornyn said, acknowledging, however, that “Texas would like to have the investment.” Cornyn seems to forget that the American Recovery and Reinvestment Act was crafted in Congress, and apparently passed without much thought by Senators and Representatives as to what American businesses would do with the $787 billion they were doling out.

Boxer’s Committee Reports Out Climate Change Bill, Hopes For Copenhagen Conference Dim

2009-11-05T14:15:00.001-08:00

The Senate Environment and Public Works Committee chaired by Barbara Boxer reported out the Kerry/Boxer climate change legislation on a vote 0f 11-1, with none of the Republican members in attendance. The lone Democrat voting against the bill was Senate Finance Committee Chairman Max Baucus, who strongly opposes the bill’s 20% greenhouse gas emission requirement. Baucus’ opposition to the bill will make it difficult to secure passage in a floor vote.

The 950 page legislative measure must still be pieced together with the work product of five other Senate committees having some sort of jurisdiction over global warming and greenhouse gas emission legislation, and a floor vote in the Senate looks unlikely before next year.

State Department Special Envoy on Climate Change Todd Stern holds out little hope of any significant action on an international climate change treaty at the Copenhagen conference coming up next month. The current treaty, the Kyoto Protocol, which the U.S. refused to ratify, expires in a little over a year. Noting that developing nations see carbon emissions as a problem created by developed economies, and worry that their own economic growth will be suppressed by a climate change agreement restricting their emissions, Stern said “The mentality that looks at the world through those lenses will not produce results.”

Nevertheless, in the absence of US action establishing a basis for belief that the economies of the first world are willing to negotiate in good faith, there is little chance that anything will come out of Copenhagen beyond a calendar for future talks.

Recovery.gov Range Of Mistaken Data Expands

2009-11-05T14:13:00.000-08:00

It isn’t just education where job creation figures reported on the federal RAT Board website Recovery.gov have proven inaccurate. In addition to the situations we covered earlier where schools were reported to have saved or created more jobs than they have teachers on their payrolls, it seems other areas of the stimulus spending are also over reporting job preservation or creation statistics.

For a particularly egregious example, Fayetteville National Cemetery in Arkansas used $1,047 in stimulus cash to purchase a single lawn mower. The agency reported to Recovery.gov that its lawn mower purchase saved or created 50 jobs. Huh?

The real criticism of the stimulus spending, beyond the obviously outrageous job creation claims of some of the reporting government agencies, is that, despite President Obama’s promise that 90% of the stimulus created jobs would be in the private sector, of the 640,000 jobs the web site claims were created or saved by stimulus appropriations, 325,000, or more than 50%, are in the public sector. So much for accuracy of economic predictions.

Postal Service Shipping Rates Increasing

2009-11-05T14:11:00.000-08:00

If your business ships documents or products using U. S. Postal Service flat rate boxes, widely advertised as an economical and efficient shipping method on TV, your costs will go up the first of next year. While small flat rate box shipping cost will remain $4.95, medium box rates will increase from $10.35 to $10.70, and large box rated will go up from $13.95 to $14.50.

Express mail envelope rates will increase from $17.50 to $18.30. Standard, parcel post and first class mail rates will remain unchanged.

House Health Care Reform Measure Sharpens Differences

2009-11-04T15:26:00.000-08:00

Tuesday night’s release of a 42 page managers’ amendment to the 1990 page House health care reform bill sharpens the focus of Congressmen on the differences within the Democratic caucus which still plague efforts to marshal the required 218 votes to pass the legislation. Still missing from the 2032 page legislative package are the provisions respecting denial of federal funds for abortion coverage, and for excluding illegal immigrants from participation in federally subsidized health insurance.

The fact that these two issues remain the most contentious within the Democratic caucus gives Republican Congressmen hope that there is still a chance to delay or derail health care reform altogether. House Rules Committee Chair Louise Slaughter expects the House floor vote on the health reform measure to take place Saturday, since language for the abortion provision is still being worked out, and will have to be included in the rule on the bill, expected to come up for a Rules Committee vote at 2:00 p.m. Friday. “We’re further trying to craft language,” said Congressman Jim Langevin, leaving House Majority Leader Steny Hoyer’s office this afternoon. “We don’t want the abortion issue to be the issue that derails universal health care reform.”

Republicans are already bridling at the move to leave the abortion provision to consideration in the vote on the rule, since the proposed language will not be made public for 72 hours before the floor vote. Michael Steel, spokesman for House Minority Leader John Boehner, complained, “If Speaker Pelosi intends to address critical issues like taxpayer funding for abortion in the rule, they should make it available for the American people to read for 72 hours. Transparency means putting the whole bill online for 72 hours.”

New things which are covered in the terms of the managers’ amendment include a $1 billion dollar fund available to states for use in controlling health insurance premium increases, language forcing insurers to disclose pricing differences between on exchange and off exchange policies, limits on “excessive or unjustified” health premium increases, and an estimated $24 billion “pay for” ending paper mill tax credits for burning “black liquor” as a cellulosic alternative fuel.

In the meantime, in efforts to focus the political differences over health care policy, Republicans have introduced their own 219 page health care reform measure, eliminating mandates for citizens to buy coverage and for employers to offer it, and limiting malpractice damage awards for pain and suffering and impaired quality of life to $250,000 in any case of injury or death.

Senate Majority Leader Harry Reid predicts debate on health care reform in that chamber will spill over into December, and would not commit to being able to send a bill to the Oval Office before the end of this year. “We’re not going to be bound by any timelines. We need to do the best job we can for the American people,” Reid announced at a news conference.

Text of Managers’ Amendment:
http://docs.house.gov/rules/health/111_hr3962_dingell.pdf

Text of House Bill:
http://docs.house.gov/rules/health/111_ahcaa.pdf

Text of Republican Alternative:
http://rules-republicans.house.gov/Media/PDF/RepublicanAlternative3962_9.pdf

Recovery.gov Numbers Miss By A Mile

2009-11-04T15:25:00.000-08:00

Figures don’t lie, and the teacher will check your work. Obama RAT Board officials responsible for reporting on the economic effects of the spring’s stimulus legislation must have missed class the day that lesson was presented. In a rush to produce figures showing a positive effect of the $787 billion appropriation on the American economy and employment, the Recovery.gov website got it wrong – way wrong. Just looking at numbers reported on Recovery.gov and comparing them to what we know about local suburban school districts here shows that “teaching jobs created or saved” as reported on the federal website exceed the total number of teachers employed in the district. Who knows what other mistaken numbers are contained in the federal information?

Recovery.gov says the $1.25 billion in education funding received by Illinois schools from the stimulus package saved or created 14,330 teaching jobs in the state. A quick review of district by district reports demonstrates, however, that the reported number on the website could be off by more than 20%. Some examples:

Dolton/Riverdale: Recovery.gov says 382 teaching jobs were created or saved. The district employs only 240 teachers altogether.

Kankakee: Recovery.gov says 665 teaching jobs were created or saved. The district employs only 600 teachers altogether.

North Chicago: Recovery.gov says 473 teaching jobs were created or saved. The district employs only 290 teachers altogether.

Wilmette: Recovery.gov says 166 teaching jobs were created or saved. The district’s superintendent says there were no teaching jobs created or saved.

The average margin of error in just these four examples is over 22.6%. That’s just not “close enough for government work.”

Chinese Drywall Situation Under Health Scrutiny

2009-11-04T15:23:00.000-08:00

Congress, the Consumer Produce Safety Commission, USEPA and the Centers for Disease Control are investigating whether smelly Chinese drywall installed in 100,000 new homes in 30 different states is a health hazard to the families living in the houses. Acknowledging the existence of indoor air contamination in the affected homes, which are the subject of civil lawsuits in Louisiana, Florida and other states, Michael McGeehin of CDC says other contaminants besides sulfurous gasses have been identified in the homes in question, including formaldehyde. Health officials say the formaldehyde does not come from the drywall, and further testing is needed to determine whether the medical symptoms of home occupants are caused by gasses emitted from the drywall.

Federal officials awaiting test results say it may be another month before they have answers to the health issues plaguing people who live in the homes, where dramatic corrosion of copper water pipes and air conditioning coils is just one of the problems the drywall is causing. CPSC head Inez Tenenbaum has talked with Chinese government officials about the drywall issue, but has received no commitments of help in dealing with the problem from China.

Record Hill In Maine Getting Wind Farm Despite Congressional Foot Dragging

2009-11-04T15:21:00.000-08:00

Even though the timetable for Congressional action on climate change legislation keeps getting pushed further and further down the calendar, some renewable energy projects are proceeding without waiting to see what Congress has in mind for the future of fuel and power in America. Record Hill Wind, a project being built along a north to south ridge line in Roxbury, Maine, is already under construction. The project will include 22 wind turbine generators along the peak of the ridge line, optimally arranged to catch the prevailing westerly winds from Canada and New Hampshire.

The 50.6 megawatt facility will produce 130 million kilowatt hours of power annually – enough to power every household in Oxford County. Delivery and erection of the turbine generators will start next June, with the facility to be commissioned in early fall 2010.

Union Pacific And CenterPoint Building $370 Million Container Terminal In Joilet

2009-11-04T15:19:00.000-08:00

Construction is underway on a 785 acre rail/highway container terminal at the Union Pacific property in Joliet, near I-55 and I-80, with general contractor Ragnar Benson already putting down over 18 miles of railroad tracks. The fast track construction project is expected to create 1,200 construction jobs between now and June 2010.

William Charles construction is the site work contractor, and it will be placing 470,000 tons of ballast underneath the 10 rail tracks in the project. The facility will ultimately handle half a million containers a year.

Mandatory Paid Sick Leave Bill Introduced

2009-11-04T15:15:00.000-08:00

House Education and Labor Chairman George Miller is pushing a bill to require employers to grant paid sick leave if they ask workers with the H1N1 flu or other contagious illness to stay home from work. Miller says 50 million Americans have no paid sick leave, particularly in the food service and hospitality industries, and that these workers are the most likely to face employer requirements to stay away from work if they get sick. Employees, Miller insists, should not have to choose between their paychecks and the health of coworkers and customers.

The bill applies to all businesses with 15 or more employees, but exempts any business already providing at least five days of paid sick leave to workers. Miller plans to hold a hearing on the bill this month, and bring it to the floor for a quick vote before the flu season gets info full swing.

Climate Change Coal Compromise Soothes Baucus

2009-10-30T13:36:00.000-07:00

Montana Senator and Finance Committee Chairman Max Baucus is backing down from his considerable disappointment expressed during hearings earlier this week on the Kerry/Boxer climate change measure, now that incentives have been written in for “early actors” who adopt carbon sequestration technology at their coal fired power plants if they can capture 50% of greenhouse gas emissions. Montana has the largest coal reserves of any state in the nation, but they are mostly undeveloped because transportation costs for Montana coal price it out of the market in rust belt states with numerous coal fired power plants. Construction of new, efficient, carbon capturing coal fired power plants could develop a big new market for Montana coal.

Pennsylvania’s Arlen Specter and Ohio Coal Association President Mike Carey are both still opposing the Kerry Boxer bill because they say it will be a job killer in their states. Senate Environment and Public Works Chair Boxer has scheduled a markup of the Kerry/Boxer bill in her committee beginning Tuesday, following three days of hearings featuring 54 witnesses on the bill this week. Republican members of the committee have said they will delay the measure by boycotting the markup, which would deny Boxer the quorum required under Senate rules for conducting a markup of the bill.

Senator Durbin Says Front Loaded Infrastructure Spending Should Be The Next Stimulus

2009-10-30T13:34:00.000-07:00

Although no one has as yet proposed a specific mechanism for funding a six year, $500 billion reauthorization of the federal Highway Trust Fund, it seems everyone in Congress expects that will be the funding level once new revenues are decided upon. Illinois Senator and Majority Whip Dick Durbin suggested yesterday that one additional move the folks in Washington can make to further stimulate the economy would be to “front load” that spending, instead of using the money evenly across the six year time period.

Durbin’s idea is to allocate $150 billion to the first of the six years, accelerating road, bridge, transit and waterway construction projects to the present, while leaving $70 billion per year for the remaining five years of the reauthorization. Durbin is enlisting Pennsylvania Governor Ed Rendell, California Governor Arnold Schwarzenegger and New York City Mayor Michael Bloomberg in his effort. While House Ways and Means Chairman Charles Rangel has not proposed any revenue measure for funding the $500 billion, Durbin says Senate Finance Chairman Max Baucus “has come up with enough money to take us through next year.”

Meanwhile, the continuing resolution attached to the Interior – Environment appropriation bill on its way to the Oval Office today extends the Highway Trust Fund at current levels through December 18, 2009, and Senate Environment and Public Works Chair Barbara Boxer is still at loggerheads with House Transportation and Infrastructure Chairman James Oberstar respecting how to keep funding road projects currently underway until revenue measures supporting a six year reauthorization can be proposed and passed.

Consortium Using Stimulus Cash To Erect Chinese Made Wind Generators

2009-10-30T13:33:00.000-07:00

A consortium of American and Chinese companies, using Chinese bank financing and US government grants and loans under the stimulus legislation, plans to build a $1.5 billion wind farm on 36,000 acres in West Texas, using 240 2.5 megawatt wind turbines manufactured in Shenyang, China.

Construction is scheduled to begin next March, when the first turbines will be arriving on site. The project will create 300 temporary and 30 permanent jobs, and when completed, should generate 600 megawatts of wind power. Companies involved in the project include A-Power Energy Generation Systems, U. S. Renewable energy Group, and Cielo Wind Power.

Broadband Oversight Hearings Highlight Burdensome Grant Paperwork

2009-10-29T12:23:00.000-07:00

House Small Business Chair Nydia Velazquez gave Commerce Department and Agriculture Department officials an earful Wednesday over the complexity of the 200 page long grant application for businesses seeking to extend broadband coverage into communities needing the most help. The grant process has fallen nearly a month behind schedule, and Velazquez complained that the application paperwork discouraged otherwise viable applicants from getting grants and loans to extend service to folks needing help the most. “More often than not, small businesses can’t afford in house lawyers, accountants, or support staff,” she pointed out in asking the bureaucrats to find a more streamlined grant process.

Small Business ranking member Sam Graves echoed her concerns. “As the first round of broadband funding concludes,” he remarked, “it is imperative that government make changes.”